The Courier & Advertiser (Fife Edition)
Lloyds boosts its UK credit card exposure with MBNA takeover
Lloyds Banking Group has completed its acquisition of consumer credit card business MBNA from Bank of America after regulators rubber-stamped the £1.9 billion 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’s portfolio was a “good fit” with the bank’s existing credit card business.
“The acquisition, which is funded through strong internal capital generation, increases our participation in the UK prime credit card market, where we were underrepresented, and strengthens our position as a UK-focused retail and commercial bank,” Mr HortaOsorio said.
The deal will provide a £650 million-a-year boost to Lloyds’ group revenues, while enhancing the net interest margin by around 10 basis points per year.
Lloyds aims to deliver cost savings of £100m per year within two years at MBNA, representing 30% of the unit’s cost base.
The announcement comes weeks after Lloyds was fully privatised, after the UK Government sold off its final stake in the lender.
It had held an interest in the group since a bailout following the financial crash in 2008.
MBNA, which booked post-tax profits of £123m in first half of 2016, will be kept as a challenger brand and will help Lloyds strengthen its credit cards market share from 15% to 26%.