Tesco Bank has launched a long-term strategic partnership with Barclays, valued at £700m.
The deal, which is for an initial 10-year period, will see Tesco Bank receive £600m in proceeds, along with an additional £100m in further net cash after the settlement.
Tesco said that the partnership "will allow us to offer customers Tesco-branded banking products and services, benefiting from the power of Tesco Clubcard, the UK's largest loyalty programme, in addition to exploring other opportunities to offer value to Tesco and Barclays customers".
Furthermore, under the terms of the agreement, Tesco Bank will receive annual income for the use of the Tesco brand, for growing the customer base through Tesco channels, and as a result of Barclays’ participation in the Tesco Clubcard programme.
Group chief executive at Tesco Bank, Ken Murphy, said: "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.
"The transaction will also significantly reduce our financial liabilities, in turn strengthening our balance sheet and allowing us to focus on continuing to grow our core retail business. I'm hugely grateful to our colleagues for their dedication and excellent service to our customers, and I'm confident that this new partnership approach will build on that success."
Tesco Bank will retain its current existing activities, including insurance, ATMs, travel money and gift cards, and around 2,800 staff, including the senior management team, will transfer to Barclays.
Completion of the sale is expected to take place in the second half of 2024.
Group CEO at Barclays, C.S. Venkatakrishnan, added: "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."
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