Lloyds completes £1.9bn acquisition of credit card firm MBNA

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.

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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.