British bank Barclays on Friday said it had agreed to buy the retail banking operations of Tesco, as the supermarket giant concentrates on its core food business.
Barclays will pay up to £700 million for Tesco Bank - handing it a portfolio of credit cards, other loans and deposits, according to statements from the two companies.
Barclays added that it would retain Tesco Bank's 2,800 staff, including senior management, as well as the brand representing Britain's largest retailer.
Tesco said it would return the majority of cash proceeds from the sale to its shareholders.
"Similar to our acquisition of Kensington Mortgages last year, this partnership with Tesco is a further demonstration of the investment we continue to make in our UK consumer business," Barclays chief executive C.S. Venkatakrishnan said in a statement.
The deal is due to complete in the second half of this year, subject to regulatory approvals.
Tesco does not have bank branches but its supermarkets house ATMs, which Barclays said it would retain.
"The transaction will... significantly reduce our financial liabilities, in turn strengthening our balance sheet and allowing us to focus on continuing to grow our core retail business," said Tesco chief executive Ken Murphy.
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