It will pay around £600m for Tesco Bank’s customer deposits and loans, as well as the ability to offer Tesco-branded credit cards and loans.
Barclays said the takeover is a “further demonstration of the investment we continue to make in our UK consumer business”.
Chief executive C.S. Venkatakrishnan added: “We are looking forward to working closely with the team at Tesco over the coming months to enable a smooth transition and, subject to completion of the transaction, we look forward to welcoming Tesco Bank colleagues and customers to Barclays.”
And Tesco boss Ken Murphy said the tie up will offer “greater value for customers and for our business”.
He said: “By working with one of the UK’s leading banks, we can bring customers new and innovative propositions, which will continue to benefit from Tesco Clubcard’s unique insight and digital capabilities.”