TESCO HAS confirmed that its personal finance arm in Ireland has “temporarily halted” issuing personal loans here but says its other financial services products are unaffected.
It is understood that the number of people here defaulting on their loan repayments had increased significantly of late.
It is believed that Tesco, which prides itself on providing good value to customers, was faced with having to bump up its interest rates here and becoming uncompetitive in the marketplace.
Tesco Personal Finance charges 6.9 per cent on its loans but would have had to raise this rate to more than 9 per cent to continue lending.
Tesco Personal Finance has issued 3,600 personal loans in the Republic, with an average value of €9,500. All of the loans are underwritten here by Ulster Bank, which is owned by Royal Bank of Scotland.
“All existing customers will continue to be serviced by Ulster Bank and we are writing to all customers to confirm this,” a statement from Tesco said.
Tesco said yesterday that it “expects to be in a position to offer consumers another competitive alternative in the near future”, although it declined to put a timeframe on this.
Tesco Personal Finance entered the Irish market in 1999, launching with a credit card. The company also offers car and life insurance and began offering personal loans about five years ago.
The retailer said its other products would be unaffected by its decision to withdraw from lending in the Republic.
In December, Tesco took full ownership of its personal finance company by buying out Royal Bank of Scotland. It continues to offer personal loans in the UK.
