Tesco seen cracking banking top 10

 

Tesco, which has been accelerating its push into banking, is expected to take a 1.5 percent share of the UK retail banking market as early as 2013, propelling it into the top 10, according to Datamonitor.

Britain's biggest retailer bought Royal Bank of Scotland out of a financial joint venture in July 2008 and has since unveiled plans to boost banking profits.

It has gone on a staff recruitment drive and has started testing bank branches within stores, capitalising on consumer discontent with traditional banks after the crisis.

But the business research group said on Thursday that the top five lenders - Lloyds Banking Group, RBS, HSBC, Barclays and Santander - currently hold more 80 percent of current accounts and would broadly keep their stranglehold on the market, despite government hopes that asset sales will entice new players and increase competition.

At 1.5 percent, Tesco would hold a share just above that currently held by regional lenders Yorkshire and Clydesdale, owned by National Australia Bank.

Datamonitor said other new arrivals preparing to launch in the UK market in coming months would also make a splash, including U.S. entrepreneur Vernon Hill's customer-friendly Metro Bank, which has promised longer opening hours and even dog biscuits for pets. It is still awaiting regulatory approval.

Based on Datamonitor forecasts, Metro Bank should have a 0.5 percent share of the UK current account market by 2015.

That would also put Metro Bank into the top 10, above both building society Britannia and Citibank.