Having seen off its rivals on the high street, Tesco is now taking on the banks in its latest plan for global domination. Yesterday the supermarket giant bought Royal Bank of Scotland out of its Tesco Personal Finance (TPF) joint venture for £950 million.

Having taken a 30 per cent share of the food market, Tesco used the latest acquisition to announce that it was stepping up its assault on the services sector. Tesco estimates that it can make £1 billion a year from services such as personal finance, telecoms and online shopping, up from about £400 million last year. Sir Terry Leahy, Tesco's chief executive, said: “Services are bigger and faster-growing markets than food.”

Andrew Higginson, the group's finance and strategy director, will become chief executive of retailing services, overseeing a beefed-up services team. The wholly owned TPF will be run by Benny Higgins, the former head of HBOS's retail business, who left the bank last August after his sales strategy saw HBOS's mortgage market share halve to 8 per cent. In 2006 HBOS had used a £1.1 million a year package to lure Mr Higgins from RBS, where he had overseen the Tesco joint venture.

Tesco has also hired Iain Clink, formerly head of cards and direct finance at RBS, to become TPF's finance director. Lance Batchelor, who joined Tesco a year ago from Vodafone to become UK marketing director, will move to run Tesco Telecoms.

Mr Higginson denied that the increased focus on services was an admission that Tesco was struggling to increase its share of the food market. This month it emerged that Tesco had developed new own-brand products after hard-pressed families defected to discount retailers such as Aldi.

“People are spending more of their disposable income on services,” Mr Higginson said. “It's one of the fast-growing streams where we think we can do something going forward.”

He said that RBS would continue to supply TPF with financial products to sell but some of those contracts would end within two years. TPF sells general insurance, credit cards, personal loans, simple savings products but plans to move into new products. “The current account is one we'd look at very carefully because that's at the core of peoples' relationships with their finance services provider,” Mr Higginson said. He said that at present margins on mortgages were too low for Tesco.

TPF delivered £206 million in pre-tax profit last year and is expected to make over £240 million this year.

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