UK retailer Tesco plans move into banking

The world's third largest retailer, Tesco Plc is ratcheting its expansion into personal finance with plans to offer mortgages by the end of the next year. The UK supermarket giant is also hoping to branch into current accounts by the end of the year and will set up a call centre in Glasgow that will create over 800 jobs.

According to Andrew Higginson, chief executive of Tesco Retailing Services (TRS), there now exists a real opportunity to create 'a strong competitor in the market place' even as traditional big banks cut jobs and services in the downturn.

Tesco has received support from Chancellor Alistair Darling who has seen, with growing frustration, the traditional lines of credit for consumers and businesses dry up at major banks like Lloyds Banking Group and Royal Bank of Scotland. Darling visited the group's Edinburgh base yesterday to praise Tesco's initiative in generating new jobs.

Darling said the UK needed more competition in the banking sector adding that people also needed choice. Tesco Personal Finance (TPF) which is a division of TRS is being planned to be rebranded as Tesco Bank to capitalise on the growing distrust on existing high street bank.

Higginson said that it was hard to ignore that people's trust in the banking sector is at a very low point and pledged to bring transparency, openness and simplicity to banking.

Higginson said that Tesco was pleased to be a new competitor in the banking market.