Tesco 'unlikely to buy Northern Rock'

Britain's largest retailer – Tesco, has said it is not likely to show interest in a bid for Northern Rock - nationalised in February 2008, according to an industry source.

Tesco's early interest in the bank was first noted by the Times newspaper, together with private equity funds and the Virgin Group, in Britain's highest-profile victim of the credit crunch.

The industry source said it had expressed some interest previously, but this had not followed up.

The supermarket group demonstrated its dominant move into the banking sector last July after buying out its partner in the finance venture - Royal Bank of Scotland, in a £950m deal.

In March, Tesco announced it would be joining the competition in the traditional sense by opening bank branches within 30 of its stores by the end of the year.

There are over 2,200 Tesco stores throughout the UK, so Northern Rock's branch network would be of little use, and the firm has remained cautious about delving into the mortgage industry at present, which is Northern Rock's main business area.

According to the Times, the government is keen to sell off Northern Rock before the general election.

Richard Branson put a bid for the bank before it was nationalised by the government, but it has been reported that he is still interested.

Written by Sam Gooch