Tesco, Britain's biggest retailer, is unlikely to be interested in a bid for nationalised bank Northern Rock, an industry source said on July 01. Earlier, the Times newspaper said Tesco had shown a provisional interest, alongside private equity funds and Richard Branson's Virgin Group, in Britain's highest-profile victim of the credit crunch, which was nationalised in February 2008.
The industry source told Reuters the supermarket group had expressed some interest in the past, but this had not led to anything. Tesco said it did not comment on rumour and speculation. The supermarket group announced a major push into banking last July with a 950-million-pound ($1.6 billion) deal to buy out Royal Bank of Scotland from the two firms' finance joint venture. Eager to cash in on growing disillusionment with traditional banks, Tesco said in March it planned to open bank branches in 30 of its stores by the end of this year.
The firm, which has over 2,200 stores in the UK, would have little need for Northern Rock's branch network and has previously sounded cautious about expanding into mortgages - Northern Rock's main area of focus - while not ruling it out in the future.
The Times said the government wants to sell Northern Rock before the next general election, which must be called by mid-2010. A spokesman for the Treasury said the government was focusing on getting European Commission approval for its restructuring plans for Northern Rock. The Commission last week said it wanted more information from the government on state aid for the bank. Branson, who tabled a bid for Northern Rock before the government decided to nationalise it, told Reuters he was still keen on the bank.