Lloyds Bank buys up credit card firm MBNA in £2bn deal
Lloyds Banking Group has swooped for consumer credit card business MBNA from Bank of America in a £1.9bn deal. The banking giant said MBNA, which holds assets of £7bn, would deliver strong financial returns and bolster its position in the UK prime credit card market.
Antonio Horta-Osorio, group chief executive of Lloyds, said MBNA was a "good fit" with the bank's current credit card business.
He added: "The acquisition, funded through strong internal capital generation, increases our participation in the expanding UK credit card market, with a multi-brand strategy and advances our strategic aim to deliver sustainable growth as a UK-focused retail and commercial bank."
The deal will provide a £650m-a-year boost to Lloyd's group revenues, while enhancing the bank's group net interest margin by around 10 basis points per year.
Once it is given the green light by regulators, the tie-up is expected to be complete by the end of the first half of 2017.
The move will see Lloyds buy MBNA from Bank of America subsidiary FIA Jersey Holdings Limited, delivering cost savings of around £100m per year within two years.
The savings would represent around 30% of MBNA's cost base in 2015, Lloyds said.
The announcement comes after Lloyds took another step towards privatisation last week when the Government announced it had sold off a further chunk of the bank, taking its stake down to less than 7%.
It means more than £17.5bn has been returned to Government coffers since the lender's £20.3 billion bailout at the height of the financial crisis. In October Lloyds said it had set aside another £1bn to meet compensation claims for the mis-selling of payment protection insurance (PPI), as it attempts to draw a line under the scandal.
On the MBNA deal, the bank said its purchase price includes £240m for future PPI claims, adding that its "exposure of PPI liability" would be "capped at this amount".