Lloyds Banking Group has agreed to acquire MBNA Ltd (MBNA), a UK consumer credit card business, from FIA Jersey Holdings Limited, a wholly owned subsidiary of Bank of America.
The acquired MBNA business comprises gross assets of c.£7bn. The transaction is expected to complete by the end of the first half of 2017, subject to the receipt of competition and regulatory approval.
In the first half of 2016 the gross assets acquired delivered post-tax profits of £123m and are being acquired for £1.9bn. The purchase price includes c.£0.8bn of acquired equity and assumes £240m for future PPI claims, with the Group’s exposure to PPI liability capped at this amount.
On completion of the transaction, the Group’s market share in credit cards will increase from c.15% to c.26%.
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.”
