Barclays has announced it is to acquire ‘most of’ Tesco Bank in a deal worth around £600 million.

The bank said that Tesco’s retail banking customer base is “broadly similar” to Barclays UK’s existing customers and will complement its current business, “as well as build on our existing UK strategic partnerships with other leading retail, consumer electronics and loyalty programme brands”.

Barclays will acquire Tesco Bank’s credit cards, loans and savings accounts, and will market Tesco-branded services as part of a partnership for an initial 10 year period.

Tesco meanwhile has retained some services including insurance, ATMs, travel money and gift cards.

The deal is expected to receive regulatory approval in the second half of 2024, after which around 2,800 staff will transfer to Barclays.

C.S. Venkatakrishnan, group chief executive of Barclays, said: “This strategic relationship with the UK's largest retailer will help create new distribution channels for our unsecured lending and deposit businesses. We are able to bring our expertise in partnership cards developed over decades in the US to enhance further the highly successful Tesco Clubcard loyalty scheme.

“This partnership with Tesco is a further demonstration of the investment we continue to make in our UK consumer business. We are looking forward to working closely with the team at Tesco over the coming months to enable a smooth transition and, subject to completion of the transaction, we look forward to welcoming Tesco Bank colleagues and customers to Barclays.”

Ken Murphy, Tesco group chief executive, added: “Tesco Bank is a strong business that has helped millions of loyal customers to manage their money for more than 25 years. As we look to the future, our aim is to be the best provider of financial services in the UK, with this strategic transaction and partnership with Barclays unlocking greater value for customers and for our business.

“By working with one of the UK’s leading banks, we can bring customers new and innovative propositions, which will continue to benefit from Tesco Clubcard’s unique insight and digital capabilities.

Murphy added that the deal would strengthen the supermarket's finances and allow it to grow its core retail business, though he said that the majority of the proceeds "will be returned to shareholders".

The news comes several weeks after rival supermarket Sainsbury’s announced that it would wind down its banking business via a "phased withdrawal".

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