Barclays Plc has announced its acquisition of Tesco Plc’s banking business in a £600 million deal.
The transaction marks Barclays’ endeavor to strengthen its presence in consumer finance and retail banking services across the United Kingdom.
According to the terms of the deal, Barclays will pay approximately £600 million upon the completion of the acquisition.
This includes the acquisition of £4.2 billion worth of credit-card receivables, £4.1 billion in unsecured personal loans, and £6.7 billion in customer deposits from Tesco Bank.
Tesco Plc, in a separate statement, revealed that it anticipates receiving around £1 billion in cash from the sale, considering the release of regulatory capital and an earlier dividend payment by Tesco Bank.
The majority of these funds are slated for a share buyback program, demonstrating Tesco’s strategic financial planning post-sale.
The acquisition, subject to regulatory approvals, is expected to conclude in the latter half of 2024. As part of the agreement, Barclays and Tesco will enter into a 10-year partnership allowing Barclays to utilize the Tesco brand for marketing and distributing credit cards, unsecured personal loans, and deposits.
Barclays’ CEO, C.S. Venkatakrishnan, expressed enthusiasm about the strategic collaboration with the UK’s largest retailer, emphasizing its potential to create new avenues for distributing unsecured lending and deposit products.
While the deal is projected to slightly impact Barclays’ common equity tier 1 ratio, the bank does not anticipate significant alterations in financial returns or shareholder distributions due to the acquisition.