Barclays is buying Tesco’s retail banking operations in a deal worth £700m to the supermarket giant.
Barclays is taking over Tesco Bank’s credit cards, loans and savings accounts and has also agreed to market Tesco-branded banking services.
Under the deal, about 2,800 of Tesco’s banking staff will transfer to Barclays.
Tesco said customers did not need to take any action and it would contact them over the coming months.
The supermarket has retained some of Tesco Bank’s services, including insurance, ATMs, travel money and gift cards.
It has also agreed a partnership, initially for 10 years, under which Barclays will market and distribute credit cards, unsecured personal loans and deposits using the Tesco brand.
Tesco said that under the sale of the business it would receive around £600m initially and a further £100m in cash “after the settlement of certain regulatory capital amounts and after transaction costs”.
Barclays said it would integrate the business into its own over time, and Tesco said the bank would work closely with the supermarket to support staff who were being transferred.
Barclays Group chief executive C.S. Venkatakrishnan said: “This strategic relationship with the UK’s largest retailer will help create new distribution channels for our unsecured lending and deposit businesses.
“We are able to bring our expertise in partnership cards developed over decades in the US to enhance further the highly successful Tesco Clubcard loyalty scheme.”