Lloyds Bank £1.9bn takeover of MBNA gets competition green light as regulators refrain from deep dive review

 
Oliver Gill
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The government is expecting to soon sell of its final slug of Lloyds shares (Source: Getty)

UK competition authorities have cleared Lloyds Bank's £1.9bn takeover of credit card firm MBNA.

In a short statement this morning, the Competition and Markets Authority (CMA) said it would not refer the merger to a "Phase 2 investigation".

The news marks an end to the CMA's inspection of the deal.

Lloyds beat off competitors in December to snap up the credit card firm, which holds around £7bn of assets, from Bank of America.

Read more: Former Conservative treasurer to chair Lloyds' non ring-fenced bank

The takeover will take Lloyds' share of the credit card market from 15 per cent to 26 per cent. This would place it behind Barclaycard, which has a 27 per cent share.

The CMA started an initial investigation into the deal in March, focussing on whether it lessened competition for consumers.

A more comprehensive Phase 2 investigation could have led to the CMA forcing Lloyds to sell off assets to balance out its competitive position.

However, the danger of such actions appear to have dissipated given this morning's announcement that a deep dive will no longer be undertaken.

Read more: Taxpayers' stake in Lloyds has now fallen below one per cent

The takeover deal of MBNA is Lloyds first major transaction since its takeover of HBOS in 2008. Lloyds reckons it will add around £650m a year to group revenues and is also expected to have "significant opportunity" for cost synergies, expected at a £100m run rate within two years.

Earlier this week the government said it expects to sell its final shareholding in Lloyds "in days" as it now holds less than one per cent of the bank. At the height of the financial crisis the government poured in £20.3bn and took a 43 per cent stake in Lloyds.

Lloyds has been on a steady road to recovery, most recently announcing it had doubled first quarter profits to £1.3bn.

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