Tesco is to create "a major new bank" in Edinburgh - home of the disgraced Royal Bank of Scotland - relocating the headquarters of its finance operation to the capital in a move set to create 200 jobs.

Around 250 staff will relocate from offices on the edge of the city to a more central location in Edinburgh, with Tesco set to add a further 200 new staff over the next 12 months.

The move signals a new stage in the development of the retail giant’s banking arm and comes after Tesco last year bought the 50% stake in the business previously held by venture partner Royal Bank of Scotland for £950m.

Tesco Personal Finance chiief executive Benny Higgins labelled the move an “important step” in the growth of the business and said Tesco was committed to “building a major new UK bank in Edinburgh”.

“Edinburgh is the ideal place from which to move what is already a successful business into the next stage of its development,” Higgins said.

“We have continued to attract some of the best talent from across the industry, both from within Scotland and from those looking to move here for the right opportunity. There is a real enthusiasm among our staff for being based in Edinburgh.”