TESCO Bank chief executive Benny Higgins said there was a lot of negativity towards traditional banks as the supermarket seeks to take on established high street names with the launch of its long-awaited mortgage product on Monday.
Launched as a joint venture in 1997, Tesco bought out Royal Bank of Scotland's 50% share of what was then called Tesco Personal Finance in 2008 for £1 billion.
It currently offers products such as loans and insurance and is planning to follow up the mortgage launch with a Cash ISA and a current account.
Initial rates on the mortgage will start at 3.19% for a two-year deal for customers with a 30% deposit and pay an £800 product fee and £195 booking fee. The Tesco Bank mortgage range includes two, three and five-year fixed rate mortgages, and a two-year Base Rate tracker.
The maximum loan to deposit ratio will initially be 80%.
Tesco Clubcard holders will collect one point for every £4 on their monthly mortgage repayments.
Mr Higgins said: "The reason we are doing this is because 85% of the personal debts of Tesco customers is mortgage-related.
"Therefore this is a very natural extension in terms of looking after their financial needs."
He said Tesco was not aiming to lend a certain amount and did not have a market share target.
"We think there is a real opportunity to look after the needs of customers in this market," Mr Higgins said. "If we do that the market share and the growth will take care of itself."
He signalled that Tesco could take advantage of the reputational problems of the established high street names. "There is a lot of negativity towards the traditional banks," he said.
Mr Higgins insisted Tesco had a different culture, noting that its staff were not incentivised to sell products. Tesco Bank employs 3000 people operating out of offices in Glasgow, Edinburgh and Newcastle and has a 100-strong mortgage unit.
Mr Higgins, a former executive at HBOS, RBS and Standard Life, said: "We are not trying to offer the cheapest product in the market."
Instead, he said the focus would be on providing value, service and loyalty rewards. He denied the group faced reputational risk if it was forced to repossess customers' homes.
He said: "There will be occasions when a repossession takes place but it is part of the business."
House prices have been falling but Mr Higgins dismissed the idea that the company was launching its product at a bad time. "It is not opportunistic. It is not about this being a good time to do this. This is about us building a business," he said.
He said Tesco Bank would consider offering products for first-time buyers in the future.
Tesco group chief executive Philip Clarke, who has been under pressure over the group's slipping UK grocery market share, said: "Customers want choice in banking from a brand they know and trust to deal with them fairly."
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