Tesco is considering a potential £1 billion sale of its Edinburgh-based bank in what would represent a major shift in strategy.

The supermarket group has appointed investment bank Goldman Sachs to advise on the options for Tesco Bank which was launched in 1997.

City insiders have told Sky News that the review is in its early stages and may not result in a formal sales process.

A sale of a stake in the bank to a joint venture partner is said to be among the options being discussed.

The bank 5.2 million customers across its banking and insurance business and employs 3,800 staff. It sold its mortgage business to Lloyds Banking Group in 2019.

Its latest half-year results showe adjusted operating profits of £67m and in a statement with the figures it said: “The bank’s balance sheet remains strong, and we continue to have sufficient capital and liquidity to absorb changes in both regulatory and funding requirements.’

Jacqui Ferguson, a former Hewlett Packard Enterprise Services executive, has been appointed interim chair, following the departure of Sir John Kingman, the former Treasury mandarin who had chaired the bank since 2019.

Tesco paid £950m 15 years ago to acquire the Royal Bank of Scotland’s 50% stake in their joint venture which was initially known as Tesco Personal Finance.