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Barclays is to buy Tesco's retail banking business in a deal worth £600m from supermarket giant Tesco.
Barclays has also agreed to take over Tesco Bank's credit cards, loans and savings accounts and sell Tesco-branded banking services.
Under the agreement, around 2,800 Tesco banking staff will transfer to Barclays.
Tesco said customers did not need to take any action and would be contacted in the coming months.
The supermarket has taken over some of Tesco Bank's services, including insurance, ATMs, travel funds and gift cards.
It has also agreed an initial 10-year partnership in which Barclays will use the Tesco brand to sell and distribute credit cards, unsecured personal loans and deposits.
Tesco's shares rose more than 1% in early trading, while Barclays' shares rose slightly.
The supermarket's chief executive Ken Murphy said the partnership would strengthen Tesco's finances and enable it to grow its core retail business.
Although the company said the majority of the proceeds from the transaction “will be returned to shareholders.”
This includes a £250m special dividend paid by Tesco Bank to the supermarket group in August last year.
Barclays said it would integrate the business into its own business over time, while Tesco said the bank would work closely with the supermarket to support the transferred staff.
Barclays Group CEO CS Venkatakrishnan said: “This strategic relationship with the UK's largest retailer will help us create new distribution channels for our unsecured lending and deposit business. Deaf,” he said.
“We bring decades of partnership card expertise developed in the US and are able to further strengthen the hugely successful Tesco Clubcard loyalty scheme.”
Sainsbury's announced last month that it was planning a “phased exit” from the banking sector to focus on its core food business.
