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Jeremy Warner's Outlook: Now Tesco wants to be a bank as well

Monday 28 July 2008 20:26 EDT
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Tesco promises to break the mould of British banking now that it has bought out its long-standing partner in personal finance, Royal Bank of Scotland. There is good reason for taking Sir Terry Leahy, Tesco's chief executive, at his word, if only because however hard he tries, he could hardly do worse than the present band of discredited banking bosses.

As it is, Tesco's record in offering value for money across a wide range of goods and services is virtually unmatched. There is no reason to believe it won't be equally successful in banking. Tesco's network of stores gives the supermarkets group the distribution to be a real threat to the Big Five in current account banking.

RBS needs the £950m it gets for its half of the joint venture so badly that it is being forced to spawn its potential nemesis. Yet the venture is not entirely without its dangers for Tesco either. If Tesco ever became big in banking, it would also presumably become prone to calamitous bad-debt experience too.

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