It’s a funny old world where Tesco (LON:TSCO) is the answer to a monopolies problem.

The company vilified for dominance of the supermarkets sector and subject to countless Competition Commission investigations is being touted as the saviour of Britain’s bank break-up.

RBS (LON:RBS) and Lloyds Banking Group (LON:LLOY) are being forced to sell mini banks – chains of 200 to 300 branches with their customers – while Northern Rock sells its branches and good loans. Tesco is mooted as a buyer because the sale is closed to established UK banks and the retailer wants to get further into financial services, having already bought out its joint-venture with RBS for £1bn.

Most importantly, nevermind that it has its own customer-filled branches, Tesco has the money and the availability to raise the capital a bank must have. Virgin Money has grand ideas but will need to find some more capital before it can bid.

But there is an irony in Tesco – a byword to anticompetitiveness to many – topping the list of potential bidders to increase banking competition.

Yet there are similarities between the groceries and banking markets. Both are dominated by a Big Four – Tesco, Sainsbury, Asda and Morrisons compared with Barclays, RBS, Lloyds and HSBC. But while the banks are seen to abuse their monopoly and act against consumer interests, the groceries market is marked by cut-throat competition in Britain.

Tesco’s 30 per cent market share is the same as the share Lloyds has in mortgages, current accounts or small business banking. Yet Tesco’s pricing is designed to take business from rivals who have to adjust their own model to retain sales.

It is tempting to say there is much the supermarkets could teach the banks, but don’t forget that HBoS’s chief executive, Andy Hornby, was recruited from Asda and the charge against him when the bank collapsed was that he was a retailer not a banker.

Tesco has grown its market share by offering a service the public wants, rather than by acquisition. And having reached a market share that the competition watchdogs want to cap by barring it from opening new stores in underrepresented areas, it has grown by expanding into clothes, white goods, books – and abroad. It has an internet-order business to override its branch network.

Expanding into serious banking makes sense for a growing group and for a customer base that likes the Tesco brand and dislikes existing banks. But it will require the competition regulators to swallow hard to concede that Tesco is the way to break up a tightly controlled market. And what id Tesco wanted to buy the Lloyds cast-off, plus RBS’s reject business – and Northern Rock. It might be the best offer the government gets, but would Tesco suddenly be blacklisted as anticompetitive again?

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