Tesco to launch bank branches and current accounts
Tesco, the UK's largest supermarket, will open bank branches in 30 of its stores by the end of 2009 as part of a massive assault on the financial services sector.
The branches, which are likely to be called Tesco Bank, come as the retailer gears up to launch a current account, which it hopes will attract customers who are disillusioned and distrustful of existing high street banks and their high fees.
Tesco has appointed a raft of heavyweight figures from financial institutions such as Barclays and Scottish Widows as non-executive directors of its Tesco Personal Finance (TPF) division to oversee the move into mainstream banking.
The launch comes at a time of widespread public anger over the excessive bonuses taken by many banking executives, and follows the part-nationalisation of RBS and HBOS. Andy Higginson, the chief executive of Tesco Retailing Services, which is overseeing the push, said that the supermarket's bank will be "old-fashioned and conservative".
"Some banks have grown up using practices that are the opposite of Tesco – we encourage customer loyalty but many banks punish loyalty, they get people in with low rates and then make money. Ours is a different philosophy," he says. Customers will be able to gain Clubcard loyalty points through using the bank.
"The markets have now become far more rational. Some banking businesses have got into trouble for growing too fast and doing daft things," said Mr Higginson.
The first of the new branches will open next month in Brislington, Blackpool and Coventry following a trial in Glasgow. Mr Higginson said that Tesco could eventually have banks in all its branches.
TPF already offers credit cards and insurance products, however it has plans to more than double profits at its Retailing Services division from around £400m to £1bn. Current accounts will be launched in 18 months to two years once new IT platforms are up and running. In the meantime Tesco will broaden its current product range with more savings and insurance products. Mortgages could follow.
TPF has recently appointed Adrian Hill, the former chief executive of HFC Bank, and Bill Main, the former chief executive of Scottish Widows Investment Partnership, as non-executive directors. The appointments follow that of former Barclays director Graham Pimlott. Tesco is looking for a fourth non-executive with specialist knowledge of the insurance market.