Tesco PLC (LON: TSCO) is in focus this morning after a report said over the weekend that the multinational could sell its financial services arm.
On Saturday, Sky News said the supermarket chain is reviewing its footprint in the banking space that may result in it opting to divest the Tesco Bank.
Based on book value, the retail bank could be sold for over £1.0 billion. The review, however, is in initial stages only and doesn’t guarantee that the said business will be let go, the report confirmed.
The stock market news arrives over a month after Tesco PLC said its sales went up 6.6% on a year-over-year basis to £21.8 billion in the third quarter.
For the year, Tesco shares are up 10% at writing.
According to Sky News, Tesco PLC could also consider a joint venture or a partial sale of its banking arm. None of the possible outcomes will lead to “wind-down or job losses”, the report added.
Goldman Sachs is advising the company on the future of its financial services business. In 2019, Tesco Bank signed a deal with Lloyds Banking Group to offload its British residential mortgage portfolio for $4.5 billion.
It currently serves over five million customers and generated £67 million of adjusted operating profits in its latest reported half-year results. Peer Sainsbury had also considered divesting its financial services arm but then opted against it in 2021.
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