Tesco Bank is offering 3,400 employees a £1,250 pay increase to help with the rising cost of living.
The lender says around 90% of its bank workforce will be eligible to receive the rise.
The money is being handed out as staff are "likely to be feeling the greatest impact" from rising bills.
Those who are eligible for the rise will see it in their January pay packet as the increase was put into place from January 8.
The uplift to salaries, which followed discussions between Tesco Bank and both USDAW and Unite trade unions, is in addition to the bank’s annual pay review which will follow in May 2023.
Tesco Bank Chief Executive, Gerry Mallon, said: “The rising cost of living is having an impact on households across the country, and we’ve been listening to colleagues about how this is affecting them.
"That’s why we’ve taken action and awarded a permanent increase to base pay for the majority of our colleagues.
“The salary increase aims to provide sustainable, long-term support to colleagues, including our contact centre colleagues who show great commitment to helping our customers in the current economic climate.”
Tesco Bank is one of the latest UK businesses to give their staff an increase to their wage with fellow high street bank Natwest giving a £2,000 increase to over 39,000 of its UK staff on lower pay bands.
Natwest also provided a one-off payment of £1,000 for all employees in junior and junior management positions.
According to recent figures by the Office of National Statistics (ONS), the average pay in the UK rose by 6.4% between September and November 2022 compared to the year before.
This was the fastest wage growth the UK has seen for over 20 years however, due to high inflation, which currently sits at 10.5%, wages fell in "real terms" by 2.6%.
The ONS figures also found that the gap between public and private sector pay was at a record high with private sector pay rising by 7.2% annually in the three months to November.
Compared to this, public sector pay only rose by 3% during the same period.
Darren Morgan, director of economic statistics at the ONS, said the "real value" of people's pay was continuing to fall, with regular earnings dropping at the fastest rate since records began once inflation is taken into account.
