Tesco Bank has frozen the online transactions of all of its 136,000 current account holders following "online criminal activity", resulting in the theft of funds from at least 20,000 customers.
Some customers reported that money had gone missing from their accounts over the weekend, resulting in the banking arm of the British retailer opting to prevent online transfers as a "precautionary" measure.
"Tesco Bank can confirm that, over the weekend, some of its customers' current accounts have been subject to online criminal activity, in some cases resulting in money being withdrawn fraudulently," said Benny Higgins, chief executive of Tesco Bank in a statement.
Apologising for the "worry and inconvenience" the thefts have caused, Higgins said Tesco Bank is "taking every step" to protect customer accounts, which is why the bank has opted to temporarily suspend all online activity.
"We are working hard to resume normal service on current accounts as soon as possible," he said. "We can reassure customers that any financial loss as a result of this activity will be resolved fully by Tesco Bank, and we are working to refund accounts that have been subject to fraud as soon as possible."
A Tesco Bank spokesperson confirmed to ZDNet that around 40,000 accounts in total have been involved in suspicious transactions, with half of those involving theft of money.
Customers were informed of the fraudulent activity via text message on Saturday night and have been told they can still use their accounts for cash withdrawals and chip-and-pin payments, while all existing bill payments and direct debits will continue as normal.
The bank says it's working with the authorities and regulators to address the fraudulent activity, although it is yet to offer any indication of how the accounts have been compromised.
Tesco Bank has told its customers it will keep them informed about the situation through its website, Twitter accounts, and direct communications, although some customers have reported that they're having trouble getting through to the bank via phone.
In total, Tesco Bank has seven million customers who use it for services including mortages, ISAs, and insurance. The bank launched its current account banking service in 2014.