Tesco, Britain's biggest retailer, has announced a big push into banking with a £950m deal to buy out Royal Bank of Scotland from their finance joint venture.
Tesco said it planned to extend its financial services business to a full-service retail bank. It said this and other service businesses such as telecoms would be capable over time of delivering £1 billion of profits a year, up from just under £400m.
Benny Higgins, a former executive at RBS and HBOS, will run Tesco Personal Finance (TPF).
The deal is seen as a further sign of Tesco's determination to branch out of its core UK grocery market, which it dominates with a market share of about 30%. The group is already a major force in DVDs, books and clothes, and has also expanded internationally, recently opening stores in the US.
The deal is also a boost for RBS's faltering plans to boost its balance sheet by selling assets. RBS said it expected to make a £500m profit on the deal. TPF celebrated its 10th anniversary last year, when it made a profit of £206m and had 5.2 million customers for products including insurance, credit cards, loans and savings.
While most of TPF's activities are focused on the UK, it also offers some products - including credit cards and insurance - in certain other countries, including Ireland.
