A deal that will enable Tesco take over the 50 per cent stake of Royal Bank of Scotland in the Tesco Personal Finance Group Ltd (TPF) has been sealed.

The agreement was announced by Tesco on Monday, even as it emerged that it purchased the share for £950 million.

This, analyst argue, indicates the readiness of the company to set up its own full-service retail bank.

In addition to banking services it is expected that it will offer telecoms, internet shopping etc. and could make annual profits of up to £1 billion in a few years from now.

In the meantime, car insurance and credit cards are major business interests for TPF. But it also provides services like loans and saving products as well as a network of cash machines.

Tesco CEO Sir Terry Leahy commented that the expansion was part of their long-term strategy, adding that they were trusted by seven million customers and depended on to supply innovative products and services offering great value.