Tesco asks Goldman Sachs to find buyers for banking business

ircE

Bloomberg reports Tesco has started the process for the potential sale of Tesco Bank. They've appointed Goldman Sachs as an advisor to seek out buyers. No comment yet from Tesco nor GS.

Tesco Bank sold its mortgage book to Lloyds in 2019 and shut down its current accounts in 2021. Its main offerings now are savings accounts, credit cards, personal loans and insurance products. The Internet Saver has been quite competitive given its instant access, and I see the Foundation credit card as a common option for a credit-builder card. Perhaps they'll be a more attractive proposition than The Co-operative Bank, which has also reportedly been looking for a buyer.

wmb194

ircE said:

Bloomberg reports Tesco has started the process for the potential sale of Tesco Bank. They've appointed Goldman Sachs as an advisor to seek out buyers. No comment yet from Tesco nor GS.

Tesco Bank sold its mortgage book to Lloyds in 2019 and shut down its current accounts in 2021. Its main offerings now are savings accounts, credit cards, personal loans and insurance products. The Internet Saver has been quite competitive given its instant access, and I see the Foundation credit card as a common option for a credit-builder card. Perhaps they'll be a more attractive proposition than The Co-operative Bank, which has also reportedly been looking for a buyer.

That's funny because when I looked at its recent H1 2023 results I thought to myself, "it's obviously non-core so why is Tesco keeping it?" See below, with retail adjusted operating profit of £1,417m vs. Tesco Bank's relatively puny £65m.

https://www.londonstockexchange.com/news-article/TSCO/tesco-plc-interim-results-23-24/16151680

subjecttocontract

They are still opening new accounts.

Albermarle

subjecttocontract said:

They are still opening new accounts.

I think that is pretty normal. They are not in any financial trouble and a sale could take ages.

lr1277

I wonder if GS will taken on Tesco's business themselves and expand their Marcus offering?

wmb194

lr1277 said:

I wonder if GS will taken on Tesco's business themselves and expand their Marcus offering?

It would have to quit as being an advisor to the vendor and also the buyer is usually a big no-no (so no).

We do know that JP Morgan was thinking about Metro as a way to expand Chase UK a couple of weeks ago. You could probably pull up a Metro article and see the names mentioned as being likely contenders. Shawbrook has been named in relation to Co-op and Metro but IIRC it wanted an all equity deal and I'd be surprised that Tesco would want to just swap a stake in one business for another. It's the sort of business Vanquis Bank should be interested in but it's been struggling to turn itself around so I doubt it will have the wherewithal.

Lloyds, NatWest and the other big boys would probably have competition issues. Virgin Money perhaps. It can add another banking system to its stable of disparate systems that it will never integrate.

lr1277

Thanks @wmb194.

Sorry to bring politics into this but I was thinking whether GS would behave in the same way as !!!!!! Cheney.

He was asked to find a vice presidential candidate for GW Bush and ended up nominating himself. Ha ha.

But you are right about the conflict of interest whilst they remain as an advisor.

Lions_89

Who provides the banking system? HSBC? 

gt94sss2

Lions_89 said:

Who provides the banking system? HSBC? 

RBS/NatWest 

gt94sss2

lr1277 said:

I wonder if GS will taken on Tesco's business themselves and expand their Marcus offering?

Goldman Sachs seem to be closing/withdrawing their Marcus brand in the US.

As such, I seriously doubt it's going to expand if the UK. 

WillPS

gt94sss2 said:

Lions_89 said:

Who provides the banking system? HSBC? 

RBS/NatWest 

Not true. AIUI they have their own implementation of the Natwest Group credit card system, just as Sainsbury's Bank have something they inherited from HBOS, but in each case it is maintained and developed (or not) by the bank.

Savings and current accounts is all their own stuff, using HSBC for clearing.