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Santander UK to bid for credit card giant MBNA as competition heats up

Jessica Morris
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Fears For Santander UK As It Suffers A Credit Rating Downgrade
Santander is preparing to throw its hat in the ring (Source: Getty)

Santander UK is reportedly circling MBNA, as interest in the credit card giant heats up ahead of next week’s deadline for offers.

Sky News reported that the bank is considering a takeover bid for MBNA and could make a formal offer next week. MBNA has been stamped with a "for sale" sign by its current owner, Bank of America.

MBNA’s £7bn loan book would help Santander comply with ring-fencing rules due to come into force in around four years’ time. They are part of the regulatory response to the global financial crisis of 2008.

Read more: Santander UK makes bid for RBS' Williams & Glyn unit

However, a bid could cast doubt on the bank’s offer to buy RBS spin-off Williams & Glyn.

The move would see Santander UK vying with a string of potential bidders for MBNA. These include private equity giants Cerberus, Cinven, and TPG, as well as high street banks Lloyds and Virgin Money.

The auction is understood to be in its early stages, and is likely to take several months to complete.

MBNA has an 11 per cent market share of credit cards across the UK, giving it a loan book of around £7bn. The business is thought to be worth hundreds of millions of pounds.

A Santander spokesperson said: “Whilst our focus is organic growth, we will continue to analyse opportunities in our core 10 markets where they add value and benefit to our customers and shareholders. That said, we do not comment on rumours or market speculation.”

Read more: RBS mulls sale of Williams & Glyn and NatWest

MBNA declined to comment.

RBS was instructed to sell Williams & Glyn by the end of 2017 as part of its £45bn state rescue package. A deal would end a seven-year process to carve off the unit, which has 300 branches. However, the bank warned in April that it might not make this deadline.

While it would be possible for Santander to pursue both Williams and Glyn and MBNA, Sky News reported that the bank’s appetite for going after both deals at the same time was “unclear” yesterday.

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