Tesco Foray Into Home Loan Business Faces Delay
London, United Kingdom (AHN) – British supermarket giant Tesco’s planned foray into the home loans business may be delayed by at least a year. Tesco initially anticipated opening its own home mortgage unit by autumn; however, the company is having difficulty securing the needed permits from the Financial Services Authority.
The FSA has become stricter because of the credit crunch, which has negatively affected high-risk lenders such as Northern Rock and Bradford & Bingley. The delay confirms a Bank of England warning aired last week that the mortgage crunch is turning for the worse with higher deposits being required from home buyers.
Aside from going into home loans in its banking arm, Tesco plans to offer current accounts in the future.
On Tuesday, Tesco is expected to report a 10 percent hike in its January to June profits for this year to $2.55 billion (1.7 billion pounds) based on sales of $45 billion (30 billion pounds). The reporting of the company H1 results for the current financial year will be presided for the last time by Chief Executive Sir Terry Leahy, who will retire by March. Leahy will be succeeded by Phil Clarke, who currently heads Tesco’s international division.
Despite the setback in its home loans mortgage venture, Tesco is expanding its supermarket chains across the United Kingdom. Tesco is set to open 1.7 million square foot of new space for the second half of the financial year.
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