Tesco, the UK’s current biggest retailer, is rumoured to be planning a review into its presence in the UK banking sector in a move that could lead to a sale of its banking arm – Tesco Bank.
The supermarket chain operator is lining up Goldman Sachs to advise on the future of Tesco Bank, according to the report.
The review is at a very preliminary stage and may not lead to a formal sale process, but a partial sale or joint venture could also be an option for the retailer.
Goldman Sachs did not respond to a request for comment. Tesco declined to comment.
“There is no suggestion that the review of the business could result in any form of wind-down or job losses,” a Sky News report said.
Tesco Bank, which was founded in 1997, has more than 5 million customers across its banking and insurance business.
A banking analyst suggested this weekend that if it was sold, it could be worth more than £1 billion based on its book value.
The Bank employs 3,800 people and generated adjusted operating profits of £67 million in its last half-year results.
Tesco retreated from the UK mortgage market in 2019, announcing the sale of its existing mortgage book to Lloyds Banking Group for a cash consideration of £3.8 billion.
“The bank’s balance sheet remains strong, and we continue to have sufficient capital and liquidity to absorb changes in both regulatory and funding requirements,” it said in its most recent results announcement.
Tesco’s potential exit from the banking business comes 15 years after it paid £950 million to acquire the then crisis-hit Royal Bank of Scotland’s 50% stake in their Tesco Personal Finance joint venture.
More recently, rival J Sainsbury has also explored the disposal of its banking arm but decided in 2021 to terminate discussions with suitors.