The bank will cut rates on its internet saver and instant access savings accounts by 0.35% from 8 November to 0.40% and 0.25% respectively following the Bank of England’s decision to slash rates from 0.5% last week.

Rates on its instant access ISA will be reduced by 0.25% to 0.5%.

In a statement Tesco Bank said: “In recent years, market conditions have resulted in reductions in savings rates and as a consequence of this, and the Monetary Policy Committee’s decision, we have taken the decision to set new underlying savings rates.

“We will write to all savings customers with instant access accounts, giving them two months’ notice before any change takes effect. It is important to us that customers are fully informed of the interest rates on their account and trust our decision making.”

In more positive news for mortgage customers, the bank said it was reducing its standard variable rate (SVR) by 0.35% to 3.89%.