(Bloomberg) -- UK grocer Tesco Plc’s banking business is attracting initial interest from Lloyds Banking Group Plc, people with knowledge of the matter said.
Lloyds is among a number of suitors that have been studying a potential deal involving Tesco Bank, the people said, asking not to be identified because the information is private.
Deliberations are at an early stage, and there’s no certainty Lloyds will proceed with a formal offer. The structure of any potential transaction hasn’t been decided, and some bidders could opt to acquire Tesco Bank’s assets and liabilities rather than buy the entire operations.
Lloyds and Tesco declined to comment.
Goldman Sachs Group Inc. is advising Tesco, Bloomberg reported in October. The unit offers credit cards, loans and insurance products and has around 5.2 million customer accounts.
Barclays Plc has also expressed interest, the people said. Reuters reported Barclays has been exploring a potential acquisition earlier this month.
Tesco Bank is the latest mid-market bank to seek a new owner, with interest rates reaching a peak that makes their deposits more attractive to buyers.
The Co-operative Bank has been evaluating a sale for months. Metro Bank Holdings Plc secured a rescue package in October after a series of unsuccessful takeovers.
Lloyds is Britain’s largest mortgage lender and one of the biggest providers of credit cards. Like other British banks, it’s signaled that the boost to its margins from higher central bank rates may have peaked. Separately, it’s looking to sell some assets including a package of bulk annuities from its insurance unit Scottish Widows.
--With assistance from Katie Linsell.
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