No Tesco banking for Republic

Tesco has decided it will not be offering financial services from its stores in the Republic, The Irish Times has learned.

It is understood the board of Tesco Ireland considered the issue for several months and commissioned Andersen Consulting to compile a report on the viability of offering customers facilities for savings, loans, pensions and even mortgages. However, the consultants concluded Tesco Ireland would find it hard to compete with existing providers in the Republic. Tesco in Britain offers a range of banking services through Tesco Personal Finance and it was anticipated a similar operation might be set up here.

But on the basis of the recommendations in the report, Tesco Ireland has decided not to provide financial services "for the foreseeable future". However, it may link up with financial institutions in other areas like joint promotions.

Superquinn has already ruled out providing financial services to its customers, while Dunnes Stores, despite running a pilot programme in Cork with Irish Life, shows no sign at this stage of moving into the area.

The report said Tesco's objective should remain to build up its market share in food and related areas. It pointed out that if banking services were provided a significant number of extra employees would have to be hired to handle the administration.

It said joint ventures which Tesco in Britain has established with financial institutions cannot be repeated in the Republic. This is because the partners in those ventures do not have a presence here, for example the Royal Bank of Scotland.

The report also commented that the size of the credit union movement here would mean an extra layer of competition not faced by Tesco in Britain.

It added that it would take a long time for Irish consumers to associate supermarkets with banking services. The decision does not apply to Tesco's stores in Northern Ireland.

Meanwhile, the company is set to increase spending on the refurbishment programme at its stores. It originally planned to spend £75 million, but this is now expected to rise by up to £10 million and possibly more.

Some £45 million has been spent so far, with many of the refurbished stores being extended. In the new year, 12 stores will be refurbished, with those in Clondalkin, Sandymount and Ballyfermot in Dublin all due to be extended. By mid-2000 all 76 stores will be re-branded Tesco. The company aims to start work on two new stores by February 2000 and is looking at several locations, including Mahon in Cork, which is expected to be the subject of a planning application before the end of the year.