As part of this transaction, RBS will continue to provide certain commercial services to TPF post completion.
TPF was established in 1997 as a joint venture between Tesco and RBS. It has 5.5m customer accounts and offers more than 25 different products.
In the year to 31st December TPF reported profit before tax of £206m, total assets (net of intra-group funding) were £4.5bn and RWAs were £4.0bn.
RBS anticipates a profit on disposal on completion of approximately £500m.
The sale is subject to regulatory approvals and completion is expected to take place before the end of 2008.
RBS group chief executive Sir Fred Goodwin says: ‘Over the last 10 years RBS and Tesco have built a strong and successful joint venture. At this stage of its maturity it is appropriate for TPF to move to single ownership for the next stage of its growth and we wish them well with their future plans’