The banking arm of retailer Tesco was scrambling today to deal with an online attack over the weekend on 40,000 customers' accounts, 20,000 of which had money removed. 

The hack is the first on a British bank known to have resulted in customers losing money.

This will add to growing concerns about the British financial sector's vulnerabilities to cyber attacks, which have jumped in frequency over the past two years. 

Tesco Bank, which manages 136,000 current accounts, stopped all online transactions while it worked to resume normal service, although customers could still use their bank cards in shops and to withdraw money from cash machines. 

"Any financial loss that results from this fraudulent activity will be borne by the bank," Tesco Bank's chief executive Benny Higgins said. "Customers are not at financial risk."  

"We think it would be relatively small amounts that have come out but we're still working on that," he said, adding that the expected the cost of refunding customers would be "a big number but not a huge number". 
           
The bank is a minnow in Britain's retail banking market, with about 2% of current accounts, and represents only a small part of Tesco's overall business. 

It contributed £503m to the group's revenue of £24.4 billion in the first half of its 2016-17 financial year. 

But while the financial hit to the group may be limited, Tesco Bank risks serious reputational damage from an attack that affected 29% of its customer current accounts. 

Other UK banks have been targeted by cyber attacks in recent years, but the Financial Conduct Authority (FCA) which regulates the sector said it was not aware of any previous incident in which customers had lost money. 

Reported attacks on financial institutions in Britain have risen from just five in 2014 to over 75 so far this year, according to FCA data.

But bank executives and providers of security systems say there are many more unreported attacks. 

HSBC issued a series of apologies to customers earlier this year after its UK personal banking websites were shut down by a "denial of service" attack, but no customer funds were at threat during that breach.
             
Other well-known British brands hit by significant cyber attacks over the past year include telecoms firms TalkTalk and Vodafone, business software provider Sage and electronic goods retailer Dixons Carphone.