Tesco Personal Finance, the financial services arm of the
world’s third-largest retailer, has rebranded as Tesco Bank,
reflecting its ongoing ambition to become a full-service retail
bank offering current accounts and mortgages in competition with
the established UK high street lenders (see RBI 610).
The rebranding coincided with the financial services unit
posting a first-half operating profit of £115 million ($181.9
million) on revenue of £420 million.
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Since spending £950 million to buy out joint
venture consumer finance partner Royal Bank of Scotland (RBS) last
year, Tesco has grown client numbers by 300,000 and now has more
than 6 million customer accounts across its savings, loans and
credit card product portfolio.
In a separate statement it said its Clubcard
loyalty scheme, one of the world’s most successful such schemes
since its launch in 1995 (see RBI
617), now had 16 million active members in the UK,
providing the firm with an invaluable source of marketing data
about potential customers of its banking arm.
Having teamed up with Belgian insurer Fortis
to work on its insurance products as well as selecting a new
(unnamed) core banking platform, Tesco said it had no need to
acquire a bank to build market share – in the process distancing
itself from market rumours that it might be interested in parts of
failed UK mortgage lender Northern Rock.
Talking about distribution, group finance
director Laurie McIlwee said it had around 200 large stores with
sufficient space and customer numbers to avoid the need to develop
a high street branch network, but conceded it would look at parts
of Lloyds or RBS if either bank is forced by the European Union to
dispose of assets.
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By GlobalDataLloyds Banking Group, the UK’s largest retail
bank with 3,100 branches, is 43 percent owned by the state; RBS,
with 2,200 branches, is 70 percent state-owned.
On funding, McIlwee said Tesco’s banking unit
is “pretty much fully financed” by its £4.5 billion of
deposits.
