TESCO Bank is to create 650 jobs over two years in Scotland as it launches its first current account in the middle of next year.

The Edinburgh-based bank, headed by former HBOS and RBS executive Benny Higgins, already sells loans and credit cards and last year began offering mortgages.

Its move into the current account market means more competition for banks. Virgin Money is expected to also announce a similar service.

Tesco Bank initially said it was creating 300 new jobs in Glasgow and Edinburgh to launch the account, but Mr Higgins has revealed that the number of staff is expected to double in two years.

The majority of the new Tesco roles will form part of a team responsible for serving current account holders. The bank said most of the positions were full time, and instead of incentivising sales it will offer a competitive basic salary and pension scheme.

Mr Higgins said: "Since 2008, we have invested to build a bank for Tesco customers. We now have more than 6.8 million accounts and offer straightforward, transparent products which reward loyalty and provide great value.

"We are making excellent progress towards the launch of our current account next year and the recruitment of these new roles is an important milestone."

The launch will mean more banks providing current accounts, offering the potential for more competition in the market.

On Monday, David Nicholson, group director of the Halifax Community Bank, said it was "the most switched-to banking brand" as it returned to the Scottish high street for the first time in a decade.

He said people have been switching from troubled rivals such as RBS and the Co-op Bank.

Halifax, part of the Lloyds Banking Group, was said to be on target to pull in 300,000 current account customers in a year, with 200,000 switching from other providers.

Halifax, which opened a new branch in Aberdeen with others following in Edinburgh and ­Glasgow, is presenting itself as a "challenger" bank in Scotland.

The Co-op Bank, which had been regarded as a competitor for current accounts, has been hampered by its financial difficulties, which have led to bondholders, led by hedge funds, to take a 70% stake in the bank as part of a £1.5bn rescue recapitalisation. This has led to questions over its ethical stance.

The hole has been largely attributed to Co-op's merger of its banking arm with Britannia Building Society. Co-op Bank was given until December 31 to fill the shortfall.

Last week, RBS came under renewed pressure from customers after an embarrassing IT systems failure, which resulted in millions of people being locked out of their accounts.

Tesco Bank, a joint venture with Royal Bank of Scotland until 2008, opted to wait until new account switching rules came into force in September before launching the current account.

Mr Higgins, chief executive of Tesco Bank, insisted its new IT systems would be robust.

"At the very outset when we started building the bank five years ago we had to make choices about the core-infrastructure. We chose modern flexible systems, but first and foremost we chose a system that is tried and tested. It has been a Herculean task building it," he said.

"The first three-and-half-years heralded the biggest transformation, the biggest build I have ever been involved in and that was to replace RBS dependency. And it was only once we completed that, that we turned our attention to current accounts.

"It is very important customers are served well and IT is an essential part of serving them well."

The new roles will be split between the bank's main offices in Scotland - Tesco Bank, South Gyle Crescent, Edinburgh and Broadway One, Renfield Street Glasgow.

Since 2008, Tesco Bank staff numbers have grown from 200 to 4000 - based across four main offices in Edinburgh, Glasgow and Newcastle.