For those not familiar with Tesco, it's a large UK hypermarket that carries a lot of influence. They previously entered the banking market with (now tainted) Royal Bank of Scotland though they now have plans to create a completely new bank that is not part of the ever-present bonus culture. It's only a matter of time before others do the same elsewhere though as long as the banks continue to receive easy treatment, few will rush into this market. The future?
To prepare himself for his new role as chief executive of Tesco Retailing Services Higginson, the group's former finance director, has begun studying for his banking exams. During the Treasury select committee's probe into the causes of the financial crisis it emerged that many senior executives, including HBOS chief executive Andy Hornby, did not hold any banking qualifications.
Last year Tesco bought RBS's 50% stake in Tesco Personal Finance (TPF) for £950m and Higginson said the call centre, which will open next year, was a "significant step" towards offering a full banking service. It has doubled the headcount at TPF's Edinburgh headquarters to 400. Another 500 former RBS employees are also expected to transfer to the new site in central Glasgow where they will handle customer sales and services calls. The Scottish government contributed £5m to the project.
Tesco wil not launch the new products until the second half of 2010 as first it has to build the IT infrastructure required to support the bank, a project Higginson described as a "huge undertaking." The personal finance arm had previously run on RBS's systems.
The rare good news on the jobs front was welcomed by the chancellor, Alistair Darling, who described it as a "strong vote of confidence in Scotland's financial services industry". The banking crisis has resulted in a wave of consolidation and Darling welcomed a new, potentially strong player: "We need more competition and that's something that we intend to encourage. The last couple of years has seen a significant reduction in the number of people, both from abroad and British-based banks, who are lending into the market."
