Lloyds Bank pulls off £1.9bn deal to snap up credit card firm MBNA

LLOYDS Banking Group has struck a £1.9 billion deal with Bank of America to buy UK credit card business MBNA in its first major acquisition since the financial crisis.

The banking giant said the firm would deliver strong financial returns and increase its share of the credit cards market from 15 to 26 per cent.

MBNA, which has more than five million card holders and assets of around £7bn, booked post-tax profits of £123 million in first half of 2016.

The tie-up is set to be complete in the first half of next year, if it wins the backing of regulators.

Antonio Horta-Osorio, group chief executive of Lloyds, said MBNA was a “good fit” with the bank’s current credit card business. “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,” he added.

The deal will provide a £650m-a-year boost to Lloyds’ group revenues, while delivering cost savings of around £100m within two years.

It 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 per cent. More than £17.5bn has been returned to Government since the £20.3bn bailout