Tesco to make grab for mortgage market

LONDON - Tesco is now planning to offer mortgages as part of its push into the financial services market, according to its finance director Andrew Higginson.

The supermarket recently bought the half of Tesco Personal Finance that it didn't already own from the Royal Bank of Scotland for £1bn to enable it to push further into banking and telecoms services.

Andrew Higginson, Tesco's finance director, said that the number of people applying to open savings accounts with Tesco had doubled in the past week as people search for a safe place to put their money.

He said that Tesco's first current accounts would not be available for 12 months because the supermarket had to build systems to operate the business and that mortgages would follow in "due course".

Tesco had previously rejected the idea of entering the mortgage market because it didn't think it could make money at the prices offered in the market.

Higginson is moving from his position as finance director to head up Tesco's retailing services division including banking and personal finance.

The news came as Tesco reported a 10% rise in pre-tax profits to £1.45bn for the six months to August 23.

Sir Terry Leahy, Tesco's chief executive, said that the banking crisis was undermining consumer confidence and urged the banks to start lending again.

Last month Tesco launched a major press campaign to position itself as "Britain's biggest discounter".

It was hijacked by Asda who booked a spoiler campaign in the first full page colour ads available after the Tesco spots, claiming that it sells 3,457 products cheaper than Tesco.

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