Edinburgh-based Tesco Bank announced on Tuesday it has ceased new mortgage lending and is “actively exploring options” to sell its existing mortgage portfolio which currently serves 23,000 customers with lending balances of £3.7 billion. 

Tesco Bank said: “There is no certainty that any transaction will result from Tesco Bank’s exploration of options to sell its existing mortgage portfolio, nor as to the terms on which it might be transacted.

“If a transaction is confirmed, Tesco Bank will notify existing customers to explain what the sale means for their account.  

“There are no changes to customer accounts as a result of this announcement and customers do not need to take any action.”

Tesco Bank CEO Gerry Mallon said: “In recent years, challenging market conditions have limited profitable growth opportunities. 

“Our focus is on how we best serve Tesco customers and align our resources effectively to their needs while ensuring that our offer remains sustainable in the long term.  

“To that end, we have made the strategic decision to focus on serving a broader range of customers in more specific areas, which means moving away from our mortgage offer.

“We have therefore chosen to cease lending to new customers and announce our intention to explore a sale of our portfolio.”