Tesco to enter current account market
SUPERMARKET chain Tesco is to go head-to-head with high street banking giants next year as it enters the current account market.
The move will create 600 jobs and has been welcomed by British chancellor George Osborne.
Tesco Bank chief executive Benny Higgins said plans to launch a current account were the "final brick in the wall" for the lender, which already has 6.8 million accounts, with £5.2bn in savings and £6.4bn in loans.
Mr Osborne tweeted: "Good to see @Tesco entering current account market. More choice is best way to deliver a banking sector that works for customers."
Tesco said that instead of incentivising sales staff it would offer a competitive basic salary and pension scheme, as well as extensive training - in an apparent attempt to avoid the bonus culture seen to have driven mis-selling scandals at banking rivals.
It comes a week after the wider supermarket business reported another sales slump, amid a £1bn plan to refresh the group under boss Philip Clarke.
Mr Higgins said it would take four or five years for the current account business to become profitable but that Tesco was committed. "This is all about ensuring we can offer the best service to our customers. Everything Tesco does is done with our customers in mind and our current account will be no exception," he said.
Tesco launched its bank as a joint venture with Royal Bank of Scotland in 1997 but took full control of the business in 2008. Since then, employee numbers have grown from 200 to 4,000.
It says £1 billion is spent on Tesco Bank credit cards per month while since launching mortgages last year it has lent £500 million to customers. It also offers personal loans and general insurance.