Crisis-hit banking sector picked over by retailers

Tesco's decision to expand its banking business looks like a smart move, as consumers seek a safe haven for their cash away from the carnage in the traditional banking sector.

UK supermarket chain Tesco - which serves 20 million customers a week - says it has seen the number of applications for savings accounts double in recent days. The group recently bought out its banking partner Royal Bank of Scotland, paying the crunch hit bank £1 billion for its 50% stake in Tesco Personal Finance.

Now it is looking to cash in, with plans to offer current accounts in the next 12 months, followed by mortgages "in due course".

The banking crisis has undermined consumer trust and confidence in financial services stalwarts, leaving the door open for smart new entrants. We can expect more retailers and other trusted brands to follow in Tesco's wake. At the moment, the Bank of Mickey Mouse may seem a safer bet for consumers than the mickey mouse high street bank that currently holds their deposits.