Lloyds Bank completes £1.9bn MBNA credit card deal to "strengthen" position in the UK

Oliver Gill
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NASCAR - 2005 MBNA RacePoints 400 - June 5, 2005
MBNA was previously called Maryland National Bank and was bought by Bank of America Merrill Lynch in 2006 (Source: Getty)

Lloyds Bank today completed its £1.9bn takeover of credit card firm MBNA from Bank of America.

The deal to buy MBNA is the first transaction by Lloyds since the financial crisis. The last major transaction by Lloyds was its ill-fated purchase of HBOS in 2008.

The UK government sold its final shareholding in Lloyds last month after pouring £20.3bn into the lender and taking a 43 per cent stake in 2009.

Read more: Angry Noel Edmonds sets up Lloyds "honesty countdown" clock

Lloyds chief executive Antonio Horta-Osorio said the MBNA purchase "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".

He added:

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 proven integration capabilities and low cost to income ratio will deliver significant synergies and value to our shareholders.

Lloyds said bringing MBNA operations into the group will boost net interest margin, the interest it generates from lending less the interest it pays to account holders, by 0.05 per cent.

Read more: It's official: The government no longer owns any Lloyds shares

At the start of May, the Competition and Markets Authority (CMA) revealed it would not delve further into the Lloyds MBNA deal, instead giving it the regulatory green light.

The deal 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.

Lloyds has previously said it expects MBNA to add around £650m a year to group revenues and reckons it can generate £100m of cost synergies within two years.

The UK lender first announced the deal last December, beating off competition from US distressed debt fund Cerberus.​

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