Lloyds Banking Group plc (LSE:LLOY) has emerged as a possible suitor for Tesco Personal Finance plc as the supermarket chain pushes on with plans to offload its lending unit. Lloyds' rival Barclays PLC (LSE:BARC) has also been linked with a bid for the unit, which offers credit cards, loans and insurance products rather than traditional current accounts and is not seen in the bracket of a traditional challenger bank. The bank also owns an insurance underwriter that could be sold as part of the deal.

The supermarket launched a review of its banking operations in February, hiring Goldman Sachs to consider options and sound out bids for the company. Due to the varied nature of Tesco Bank's products, a buyer could also choose to hive off parts of the business or form a joint venture. Any purchase by Lloyds would be seen as a bolt-on deal rather than transformative, given the relatively small size of Tesco's operations.

Lloyds has made a number of small takeovers in recent years to bolster its offering, including buying Embark and Tusker. Buyers may be attracted by the potential to acquire Tesco's financial services customers and cross sell other financial products to them.