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Tesco today went a step closer to launching a standalone High Street bank, as Britain's biggest retailer said it is considering obtaining a separate credit rating for its financial services arm.
This would allow Tesco Personal Finance to borrow directly from the market, rather than through its parent company, giving it a firmer grip on the banking market.
Andrew Higginson, chief executive of Tesco's retailing services business, said: “To build a sizeable [mortgage] book, you have to start thinking about wholesale funding. We are moving to being a standalone bank.”
It is the latest sign of Tesco's effort to beef up its presence in the banking sector.
The retailer ran Tesco Personal Finance with Royal Bank of Scotland for 10 years before it bought out RBS's 50% stake for £950 million last year to regain control of its banking arm.
Tesco now plans to launch a current account within the next 18 months, with a mortgage offering expected soon after.
Sir Terry Leahy, Tesco's chief executive, successfully used the furore over bankers' bonuses and Government bailouts to bill his own offering as a “people's bank”.
Deposits in Tesco's current personal finance products have almost doubled from £2.5 billion in October to about £4.5 billion.
