Tesco bank to focus on its most loyal shoppers

A man carries a carrier bag as he leaves a Tesco supermarket in London October 5, 2009.

LONDON (Reuters) - Tesco, Britain's biggest retailer, will initially focus on its most loyal shoppers as it seeks to build its new banking business, it said on Friday.

The supermarket group (TSCO.L), on the second day of presentations to investors about its ambition to expand into retail services, said Tesco Bank would initially target the 15 million members of its Clubcard customer loyalty scheme.

In presentation slides on its website, Tesco said just 10 percent of Clubcard holders had a Tesco credit card, currently its biggest financial business, while only 4.2 percent had Tesco car insurance and 2.2 percent a Tesco savings product.

Tesco unveiled plans in July 2008, when it bought Royal Bank of Scotland (RBS.L) out of a financial joint venture, to double annual profits from its retail services businesses, such as banking, to 1 billion pounds over several years.

It has since gone on a staff recruitment drive, started testing bank branches in stores and signed an insurance joint venture with Fortis FOR.BR, and currently has around 6 million customer accounts.

Analysts have speculated whether it might be interested in buying assets from bailed-out banks like Lloyds (LLOY.L), RBS and Northern Rock (NRKx.L).