Tesco Bank returns with an Inflation-linked Retail Bond

Following the success of its inaugural retail bond earlier this year, Tesco Bank is issuing a second bond aimed at retail investors. The eight-year bond will be linked to the Retail Price Index (RPI) and will be issued by Tesco Bank.

It can be bought and sold by investors exclusively through stockbrokers or wealth managers with a minimum purchase of £2,000. It can be held within a stocks and shares ISA or SIPP.*

Over the eight-year term, the bonds will pay interest twice a year at a 1% annual gross rate of interest adjusted to take account of changes in the RPI**. On maturity, the amount due will be the full value of the bonds plus any overall increase in the RPI.  If the RPI has fallen during the term, Tesco Bank has committed to repay the bonds at no less than their full face value.

Benny Higgins, Chief Executive of Tesco Bank commented, 

“Our first retail bond was very successful, exceeding all expectations.  It attracted interest from a broad customer base and there was unfulfilled demand when the book was closed. The issue of our second bond, in an inflation-linked format, offers a further opportunity to investors.”

The Tesco Bank RPI-linked Retail Bond will be funded on the settlement date of 16 December 2011 and interest will be earned from this date. Investors can sell the bond at the prevailing market price (which may be more or less than the face value) before maturity on the open market through stockbrokers.*** The Tesco Bank RPI-linked Retail Bond will be listed on the London Stock Exchange’s Order Book for Retail Bonds.

The Tesco Bank RPI-linked Retail Bond is not covered by the Financial Services Compensation Scheme (FSCS). In the unlikely event that Tesco Bank defaults or becomes insolvent, customers may lose some or all of their investment.


For more information and media enquiries please contact:

Tesco Bank press office

+44 (0) 131 274 3630 

Notes to Editors: 

* If a customer has, or is eligible to set up, a Stocks & Shares ISA or a SIPP which can hold bonds, depending on their individual tax circumstances and subject to any future changes in legislation, they should be able to earn the interest tax free.
**   Inflation adjustments will be calculated by comparing the RPI level relating to the month which is 8 months before each payment is due with the RPI level relating to the month which was 8 months before the December 2011 issue date, i.e. April 2011. For more information please read the Information Booklet, Offering Circular, Drawdown Prospectus and Final Terms relating to the bonds. 
*** During market hours and subject to normal market conditions. The Tesco Bank RPI-linked Retail Bond will not be available to buy directly from Tesco Bank.

  • The retail bond is open to investors in the United Kingdom, Jersey and Guernsey in accordance with applicable regulatory requirements.
  • The Tesco Bank RPI-linked Retail Bond may not be suitable for all investors. Customers should ensure they fully understand the risks and seek independent financial advice. 
  • Investors should note that the price of the bonds can rise and fall during the life of the investment and the price of the Tesco Bank RPI-linked Retail Bond could fall below the Issue price of £100. 
  • The Tesco Bank RPI-linked Retail Bonds are not guaranteed by Tesco PLC or any other entity. In the unlikely event that Tesco Bank defaults or becomes insolvent, customers may lose some or all of their investment.

About Us:

Tesco Bank’s goal is to make banking and insurance easier and better value for people who shop at Tesco. We’ve been around since 1997 and today we help more than 5 million customers manage their money every day. Our 4,000 colleagues serve our customers seven days a week from our three main centres in Edinburgh, Glasgow and Newcastle, and we are also available through online and mobile banking 24/7. Tesco Bank participates in the Chartered Banker Professional Standards Board.

Tesco Bank is a trading name of Tesco Personal Finance plc. Registered in Scotland No. SC173199. Registered Office: 2 South Gyle Crescent, Edinburgh, EH12 9FQ

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