Tesco Bank has turned to Allen & Overy for advice on its latest multibillion-pound sale – an unexpected move given the company's close ties to Magic Circle rival Freshfields Bruckhaus Deringer.

The bank – wholly owned by supermarket giant Tesco – is looking to offload its mortgage unit to Lloyds Banking Group in a £3.7 billion deal, with A&O advising the sellers according to a person with knowledge of the deal. A second person said Freshfields was not involved.

It is not known to what extent A&O has previously acted for either Tesco or its banking arm. The multinational groceries chain has long had ties with Freshfields, which has advised the company on its biggest mandates of the past few years.