Tesco sees boost in saver numbers

Link to the article: Channel 4 (PA)

Last Modified: 03 Mar 2009
Source: PA News

Supermarket group Tesco has seen a near doubling in the amount of money people deposit with it during the past six months.

The retailer's financial services arm has benefited from consumers losing trust in the troubled banking sector due to the current financial turmoil.

Tesco Personal Finance said more accounts were opened with it during December alone, than in the whole of 2007, boosting its saver numbers up to around 500,000.

It credited the strong flow of funds during the month to a particular savings account which was offered for a limited time and attracted "tens of thousands of savers".

The instant access internet account offered a basic return of 4.5% on top of which a bonus of 1.5% was paid for the first 12 months.

A Tesco Personal Finance spokesman said: "Consumers trust us to do a good job. One of the reasons that money has come into us is that we offer a good deal."

Surveys had previously shown that consumers trusted supermarkets more than they trusted banks even before the current problems in the banking sector emerged.

The supermarket's financial services division was set up as a joint venture with Royal Bank of Scotland 11 years ago, but Tesco bought out RBS' stake in the business in July last year for £950 million.

The division has its own banking licence and Tesco has plans to offer a full banking service.

It already offers savings products, loans, credit cards and a number of general insurance products, such as home, motor, travel and pet insurance. In the future, the group hopes to expand this range to include current accounts and even mortgages.