Tesco sells mortgage portfolio to Lloyds for £3.8bn

As a result of the deal, Tesco Bank’s 23,000 mortgage customers will be transferred to Halifax, a division of Bank of Scotland, which is a wholly owned subsidiary of Lloyds.

Tesco said the sale is in line with its bank’s strategy to focus on a reduced number of products and services that serve the broad range of its customers, and will reduce operating and funding costs.

Proceeds from the sale will be used for re-investment into its customer offer, ongoing transformation of the business and re-balancing of retail and wholesale funding sources given the reduction in overall lending.

Tesco Bank chief executive Gerry Mallon said: "In May we announced our decision to stop new mortgage lending while we explored our options to sell the mortgage book.

"Our focus is on how we best serve Tesco customers and align our resources effectively to their needs while ensuring that our offer remains sustainable in the long term. As a result, we made the decision to move away from our mortgage offering. Our priority throughout has been to complete a commercially acceptable transaction with a purchaser who will continue to serve our customers well."