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Tesco plays down wholesale funding speculation

Tesco Personal Finance has played down speculation that is seeking a separate credit rating so as to access the wholesale funding markets.

In an interview with the Financial Times, Tesco Personal Finance finance director Andy Higginson commented on the fact that if Tesco were to enter into mortgage lending it may have to seek wholesale funding.

This has led to market speculation that Tesco Personal Finance may be seeking its own credit rating, apart from its parent, Tesco.

But a spokeswoman from Tesco says: “Andy made clear elsewhere that Tesco has not yet decided whether to provide mortgages and he mentioned a timescale of some two years if we were to so.

“In any event funding would come from a range of sources, principally our savings accounts which have grown by £2bn pounds in six weeks – this shows that customers trust the Tesco brand.”

Bestinvest senior investment adviser Adrian Lowcock says: “Tesco is looking to use wholesale markets to grow its financial arm and that might raise some concerns with investors. However, using wholesale markets should not be dismissed out of hand. Managed responsibly – as Tesco appears to be doing – it could be the right approach for both the company and its customers.”

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