The finance arm of the retailing giant, rebranded as Tesco Bank earlier this year, is looking for a new office building of between 40,000sqft and 50,000sqft to house extra staff for banking services, IT functions and support to the bank headquarters at the city’s Haymarket.
This will enable the group to recruit around 200 new staff, while consolidating around 300 banking staff currently sited in expensive short-term offices around the city.
The move would take advantage of the skilled labour pool made available by layoffs at Royal Bank of Scotland and Bank of Scotland, and echoes Virgin Bank’s recent efforts to recruit 500 people in the city.
But with a report from tram company Transport Initiatives Edinburgh (TIE) to council officials due next month that will outline what is achievable within the project’s £545 million funding limits, Tesco has stressed the importance of improved transport links to its business plans for the Scottish capital.
If these are not available, insiders have indicated the fledgling bank could turn to Glasgow or Newcastle, where it also has a presence, to fulfil its expansion ambitions.
Mark Jones, a director at commercial property agency DTZ, which is acting for Tesco, told the Sunday Herald: “Edinburgh is not the only location under consideration. The completion of a tram system would be quite helpful in enabling Tesco to consider west Edinburgh, particularly in relation to other centres where connectivity is perhaps better.”
Under chief executive Benny Higgins, Tesco Bank has advanced at a breakneck pace since it bought out its joint-venture partner Royal Bank of Scotland for £950m in December 2008. It has grown from around 250 to 1000 staff, the majority of them in Edinburgh.
With its retailing parent having reached near-capacity in its core business, financial services is one of a number of areas that it has earmarked for future growth. It is seeking to build substantially on its existing business, which includes 6.3 million customer accounts across savings, insurance and credit cards. It is planning a major direct marketing campaign to its 20-million-strong retail customer base this autumn, and aims to launch mortgage and current account products next year. This is expected to provide the bulk of growth in Tesco’s new services offerings, which also include telecoms and internet shopping, with a view to doubling their operating profits to £1 billion over the next few years.
Jones added that the group hoped to have identified the new office by the end of the year with a view to having it ready for staff by the spring. It is looking at around six sites in the city centre, including the Scottish Widows development at Exchange Place and Saltire Court on Castle Terrace.
He said: “Tesco has been able to recruit in Edinburgh and Glasgow relatively well. The bank’s expertise was already in the capital from the days of the Tesco Personal Finance venture with RBS. Tesco could have relocated everybody to another city, but that was an unnecessary cost. And given the underlying credit crunch impact within the financial services sector, they have been able to recruit more than adequately.”
Sarah Boyack, Labour MSP for Edinburgh Central, called the expansion plan “excellent news,” adding: “It’s a sign of confidence in Edinburgh. Clearly Tesco believe that it’s a good place to do business and that they will be able to recruit high-quality skilled staff.”
A TIE spokesman would not comment on the speculation about the future of the transport project. But he said: “The impact of Edinburgh’s new tram system as a catalyst for investment can already been seen in the £850m commitment from Henderson Global at the St James Quarter. The success of similar schemes across the globe shows that a modern tram system becomes an integral cog in maximising a city’s future economic prosperity.”