Tesco buys out Royal Bank of Scotland (RBS) from their JV business Tesco Personal Finance. RBS expects to make about £500m from the deal but Tesco look like they have most to gain from taking control of their retail banking ambitions.
A leader in multi-channel retail to show the way in multi-channel banking?
Whilst many like to throw stones at Tesco because of their success and scale of operations, I can’t help but admire the performance they drive in each area of their business. Now it seems Retail Banks have to look to Tesco as they ditch RBS, buying them out of the JV for £950m and take the challenge to the High Street banks and the Insurance Companies.
In the eleven years since its launch, Tesco Personal Finance has been doing very nicely thank you, making a £206m profit last year and signing up five million customers. I understand that the business has very low bad debts on it’s loan books and has accumulated a 4.3% share of the UK motor insurance market. So bringing it back in-house makes great sense for Tesco, they soon won’t have to share the revenue as they grow their banking business through the launch of bank accounts and other new products. I guess they will also take it overseas into the countries where where the Tesco brand is well known and respected.
Tesco Personal Finance Key Facts:
5.5 million customers
1.3 million credit card accounts
390,000 savings accounts
6.9% share of credit card market
2,700 ATMs in Tesco stores
4.3% of car insurance market
Tags: multi-channel banking, multi-channel retail, RBS, Tesco, Tesco Bank
