Brian Gibson, the group chief executive, said the new company - Littlewoods Financial Services - would start marketing personal loans, home insurance and credit cards to Littlewoods' 3.5 million home shopping customers in October. If successful, the venture will be extended to include mortgages, individual savings accounts and pensions.
Initially, Littlewoods will be relying on Woolwich's existing banking licence and products. However, the group intends to apply for its own licence from the Bank of England so that it can start marketing its own products under the Littlewoods banner within the next 18 months.
Mr Gibson said that Littlewoods had talked to some 20 financial institutions before settling on Woolwich because of its track-record in product innovation and its willingness to allow its brand to take a back seat. "We think two and two will make five," he said.
John Stewart, Woolwich's chief executive, said the deal was a good one for Woolwich since, for an investment of pounds 5m split between the two partners, it will get access to a customer base of several million, most of whom are in the North where Woolwich'sbranch presence is small.
"If you want to get three and a half million customers in a place where you are not represented, you can buy the Bradford & Bingley with all the complications that entails. You can set up Egg and give people pounds 100 for pounds 95 and lose lots of money or you can do something like this."
Lynn Peacock, Woolwich's director of operations, said that supermarket banking ventures, such as Tesco and Sainsbury's banks, had started from scratch. But with Littlewoods, Woolwich was able to build on an existing financial relationship between Littlewoods and its customers.
Littlewoods has a credit book of pounds 750m from short-term finance for customers buying through its catalogues, many of whom, according to Littlewoods' market research, are keen on extending that relationship to other financial products.Reuse content