Deal to buy credit card issuer with 7m clients and gross value of £7bn is bank’s first major acquisition since financial crisis. Lloyds Banking Group is to spend £1.9bn on MBNA, a credit card business owned by Bank of America, as the bailed-out lender continues its recovery from the financial crisis.
The UK bank’s first major acquisition since its £20bn rescue by the taxpayer during the 2008 crisis will give it a 26% share of the credit card market and allow it to produce £100m annual savings within two years.
Lloyds, 7% owned by the taxpayer, would not comment on the implications for the workforces of the two operations, which employ a combined 2,700 in Chester.
MBNA – one of the UK’s largest credit card issuers, with 7 million customers including its own brands and the official cards of several major football clubs – has been on the market for some time. Lloyds had been battling against US private equity group Cerberus, HSBC and Santander UK for the operation.
A firewall against claims for payment protection insurance (PPI) was thought to be crucial in securing the deal. The misselling scandal has already cost Lloyds £17bn – more than any other bank – and Lloyds said its exposure to MBNA’s bill was capped at £240m, indicating Bank of America will pick up the tab for anything above that threshold.