Lloyds Bank have announced the £1.9 billion acquisition of credit card firm MBNA, in their first major deal since the 2008 financial crisis.
MBNA, which is currently owned by the Bank of America, holds £7 billion of assets and is predicted to increase group revenues by £650 million per year.
In a statement, Lloyds said the transaction was “consistent with the Group’s stated strategic ambitions of growing in Consumer Finance and will enable the Group to enhance its position and offering within the UK prime credit card market.”
MBNA is a UK credit card business with a high quality customer base founded upon sound underwriting principles and credit management, which aligns well with the Group’s strategy to deliver sustainable growth through a multi-brand strategy. The MBNA brand will be maintained as a challenger brand further enhancing our customer offering.
Commenting on the transaction, António Horta-Osório, Group Chief Executive, said:
“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 MBNA brand and portfolio are a good fit with our existing card business and we will focus on providing its customers with excellent service and value. Our low cost to income ratio and proven integration capabilities will deliver significant synergies and value to our shareholders.”
The acquisition comes just months after Lloyds set aside an extra £ 1 billion in October for PPI mis-selling, at the same time as revealing that pre-tax profits had fallen 15 percent in the third quarter to £811 million. The deal with MBNA assumes responsibility for their £240 million related to mis-selling PPI.
Lloyds (LON:LLOY) banking shares rose in early trading, up currently up 1.18 percent at 63.36 (0956GMT).