Tesco goes into battle with `own label' bank
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Your support makes all the difference.Tesco is planning to take on the high-street banks with the launch of an "own label" deposit account and a credit card that will run in conjunction with its highly successful Clubcard loyalty scheme which now has 8.5 million members.
The supermarket giant, which announced a huge surge in profits on Tuesday, has been holding talks with NatWest bank about a joint venture in financial services which could see Tesco use its brand name to launch personal equity plans (PEPs), pensions and life insurance products. It is thought that the launch of a credit card is a couple of months away.
As well as a new source of profits, the move into banking would give Tesco access to much more information about its shoppers. Building a better database on its customers has always been a key part of the Clubcard scheme since it was launched last February.
Tesco refused to confirm its plans but said it was always looking for ways to develop its Clubcard scheme which already offers deals with DIY chain B&Q and travel agents Lunn Poly.
"We are continuing talking to a number of companies in order to find further opportunities for Clubcard but cannot comment on any specific examples," a Tesco spokesman said.
NatWest confirmed that talks had taken place with Tesco but refused to be drawn on any definite plans. It is thought that a Tesco credit card would only be offered to Clubcard holders and would offer a lower interest rate than traditional rivals such as Visa and Access. It would also offer benefits such as Air Miles. It is less clear how a Tesco bank account would work, though the supermarket group is unlikely to apply for a banking licence, hence the link with NatWest. It is thought that Tesco feels it could do a better job on customer service than the high street banks.
Tesco would not be the first retailer to move into financial services. Marks & Spencer announced similar plans in December 1994 including pension plans and life insurance.
Budgens launched a Visa credit card in January in conjunction with Beneficial Bank of America which was keen to break into the UK market. The Budgens card entitles shoppers to a 5 per cent discount on shopping as well as interest free credit of up to pounds 1000.
The supermarket groups have been expanding into new areas and now operate petrol stations, florists, dry cleaners, pharmacies, photo-processing laboratories andpost offices.
One City analyst said yesterday that a move into banking seemed likely. "I wouldn't be at all surprise to see them go down that route."
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