- The lender is reportedly targeting Tesco Bank’s credit card and savings products.
- Tesco is seeking buyers for its banking arm amid a shrinking financial services focus.
Barclays is exploring a potential acquisition of Tesco’s banking operations. Amidst efforts by the British retailer to minimize its financial services, Barclays has emerged as one of the potential parties aiming to acquire a stake in Tesco Bank.
According to a report by Reuters quoting sources familiar with the matter, Barclays has put forth a preliminary offer, mainly focusing on Tesco Bank’s credit card and savings account products.
Barclays’ interest in Tesco Bank marks a strategic step to bolster its domestic retail banking arm during a period when the group is aiming to strengthen its share price. This pursuit follows Barclays’ recent acquisition of Kensington Mortgages.
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Tesco Bank, established in 1997 as a joint venture between the supermarket giant and Royal Bank of Scotland, witnessed Tesco’s banking acquisition gradual increase in control over the years. Despite once considering it a growth area, Tesco has been scaling back its banking services, discontinuing current accounts, and offloading its mortgage portfolio to Lloyds Banking Group.
Barclays’ Expansion Move
The proposed deal’s valuation for Tesco Bank assets remains undisclosed. However, the company reported £57 million in pre-tax profits in the six months leading up to August 31, 2023, with a book value close to £1.5 billion at the end of the period.
In September, Barclays entered the $1.5 trillion private credit market through a partnership with AGL Credit Management, The Distributed reported. This collaboration aims to merge Barclays’ loan origination capabilities with AGL’s expertise in credit investments.
AGL Credit, co-founded by industry veterans Peter Gleysteen and the late Thomas Lee, traditionally focused on bank loans and collateralized loan obligations (CLOs).
