Tesco is to hand £700 million back to shareholders using the proceeds of a now-completed sale of its banking business to Barclays.
The supermarket giant said the deal will kick off a 10-year partnership with the finance giant, where Tesco branding stays on its banking products while they are supplied by Barclays.
Barclays will market and distribute credit cards, loans and deposits using the Tesco brand, but Tesco Bank employees and customers will transfer to the new owner.
Tesco chief executive Ken Murphy said the deal will “unlock even greater value” for Tesco Bank customers.
He said consumers will get access to “new and innovative propositions, while continuing to enjoy the unique benefits of Tesco Clubcard”.
Barclays boss CS Venkatakrishnan said the deal is “an important step in increasing our investment in the UK”.
Tesco said it will buy back £700 million-worth of shares from investors through an “incremental” buyback programme.
The retailer will start buying shares after the final tranche of an existing £1 billion buyback programme is finished.
Tesco said it will retain all the existing insurance and money services activities, including ATMs, travel money and gift cards.
It called the operations “capital-light, profitable businesses with a strong connection to the core retail offer”.
Vim Maru, chief executive of Barclays’ UK operations, added: “We will bring the strength of both businesses together, benefiting customers and colleagues.”
