Tesco facing year delay to UK mortgage plans
Published 04/10/2010 | 11:48
Tesco's plans to launch mortgages are facing a delay of up to 12 months as it battles to secure regulatory clearance, it was reported today.
The supermarket giant was aiming to launch home loans under its burgeoning bank operation by the end of the year, but is being held back by the Financial Services Authority (FSA), according to The Observer newspaper.
It is thought the delay comes as the FSA tightens up its rules in the wake of the credit crunch.
Tesco, which also hoped to launch a current account next year, may now reportedly have to wait up to a year before receiving permission from the FSA.
News of the setback comes ahead of the supermarket's half-year figures on Tuesday - the last set of results for outgoing chief executive Sir Terry Leahy.
Its interims are expected to reflect ongoing tough trading in the sector after UK sales growth almost ground to a halt - at 1.1pc - in the first quarter as the grocer wrestled with plunging food inflation.
The international business has also suffered in recent months after political unrest in South Korea and Thailand left the division's like-for-like sales "broadly flat" in its opening quarter.
Analysts are expecting some improvement in second-quarter UK sales growth, to around 1.3pc, according to Credit Suisse, while market forecasts for pre-tax profits show a rise to £1.6bn, compared with £1.42bn a year earlier.
The group is coming up against tough competition from rivals, with the most recent figures from Kantar Worldpanel showing Tesco's market share slipped to 30.8pc from 30.9pc, with growth trailing behind the likes of Sainsbury's and Waitrose.
It is a challenging time for incoming boss Philip Clarke to take the reins.
Currently international and IT director, he will become chief executive when Sir Terry steps down after 14 years in the role next March.
Tesco was not immediately available for comment.