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 £7 billion, 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 credit card business.
He added: “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.”
The deal will provide a £650 million-a-year boost to Lloyds’ group revenues, while enhancing the net interest margin by about 10 basis points a year. Lloyds aims to deliver cost savings of about £100 million a year within two years at MBNA, representing 30 per cent of the unit’s cost base.
The announcement comes weeks after Lloyds was fully privatised, with the government selling its final stake in the lender.
MBNA, which booked post-tax profits of £123 million in first half of 2016, will be kept as a challenger brand and will help Lloyds strengthen its credit cards market share from 15 per cent to 26 per cent.
