Management shake-up at supermarket group
Higgins’ new role may hasten Tesco Bank’s £1 billion flotation
Tesco Bank boss Benny Higgins is to get extra responsibility in a shake-up of the group’s management structure that is likely to prompt further speculation that he will lead a flotation of the business.
Group chief executive Dave Lewis, who is attempting to turnaround the fortunes of the ailing supermarket giant, will also assume temporary control of the UK operations.
Higgins, who helped create the Edinburgh based financial arm of Tesco as a joint venture with Royal Bank of Scotland in 1997, will add group strategy to his duties. It will put him at the core of the company’s plans and comes just weeks after speculation in the market that Tesco was contemplating a £1 billion sale of its banking division to boost its capital.
Tesco has seen it necessary to take action in response to damage to its market value which has fallen in value by around half since a series of profits warnings and a more recent accounting scandal.
The group is being probed by the Serious Fraud Office for a £263m black hole in its profit margin, and selling the bank would be seen as a partial solution to the shortfal. Tesco is already in talks with Vodafone to sell its Blinkbox video-on-demand service and may sell its Asian operations.
Tesco Bank has six million customer accounts and more than 4,000 members of staff, but a flotation would be up against recent difficulties for bank issues. Aldermore Bank pulled its flotation while Virgin Money delayed its listing which eventually went ahead at a lower price. Clydesdale is also likely to be floated early next year.
Higgins has launched mortgages and a current account at Tesco but the group is forced to tie up considerable reserves under European banking regulations.
The bank’s profits fell by almost a quarter this year, dropping from £104.7m to £80m due to rising bad debts.
The restructure of Tesco’s senior management will be seen as an indication that it intends to make the necessary structural changes in the business.
Robin Terrell, former multi-channel director who briefly led the UK business following revelations over the profit mis-statement, becomes head of customer operations.
Jason Tarry, formerly head of clothing, has been appointed head of commercial, and Jill Easterbrook, currently chief customer officer, will lead the company’s transformation programme.
Higgins, a former Celtic youth team captain, has been a fixture in the Scottish financial services for some years with high profile jobs at Standard Life, RBS and HBOS where he was head of retail banking. He was part of the team with Fred Goodwin and Sir George Mathewson who acquired NatWest in 2000.
During his time at HBOS he oversaw a fall in its market share because of a cautious approach to the boom in the housing market. Critics who said he was fired for the slide later conceded that his conservative approach had been a warning to his seniors who chose to ignore it, with disastrous consequences.
Higgins led Tesco’s buyout from RBS in July 2008.