Tesco buys out RBS in £950m deal
Britain’s retail giant is to take full control of its Tesco Personal Finance joint venture
Tesco, the retail giant that already dominates the grocery market, is accelerating its push into financial services with a £950m buyout of the 50 per cent it does not own of its financial services joint venture with RBS.
The buyout discussions have been going on since last September and were revealed by CityA.M. in April.
The acquisition is part of the strategy by Tesco, the UK’s largest retailer, to grow its share in fast growing services markets including financial services, telecoms and internet/home shopping.
Tesco believes such services could deliver £1bn in profits per annum – more than double current levels of just under £400m. The joint venture company with RBS made profits of £206m last year.
Andrew Higginson, who is currently the group’s finance director, will assume a new board position as chief executive of retailing services once a new finance director is appointed.
Benny Higgins, who has formerly run the retail divisions of RBS and HBOS, will run the new wholly-owned Tesco Personal Finance (TPF).
For RBS, the deal is about raising much needed capital. The bank, which is widely seen to have overpaid for ABN Amro, is in the process of building up its capital base.