People walk past a branch of Lloyds Bank on Oxford Street in London.
London: Lloyds Banking Group Plc agreed to buy Bank of America Corp’s MBNA credit-card business in the UK for 1.9bn pounds ($2.4bn) in cash, marking its first major deal since being rescued by British taxpayers eight years ago.
The acquisition of MBNA, which has about £ 7bn of assets, will add £650m a year to Lloyd’s revenue, equivalent to a 4 percent increase, according to a statement yesterday. As part of the deal, the London-based bank negotiated a 240 million-pound cap on MBNA’s future payouts for the payment-protection insurance scandal. “The MBNA brand and portfolio are a good fit with our existing card business,” Lloyds Chief Executive Officer Antonio Horta-Osorio said. “The acquisition, funded through strong internal capital generation, increases our participation in the expanding UK credit card market with a multi-brand strategy.”
Lloyds executives have earmarked the bank’s credit card division for expansion as the business provides stable earnings combined with low operating costs. The acquisition of MBNA, which has an 11 percent slice of the UK market, will almost double Lloyds’s current share to about 26 percent and raises it into the same league as Barclays Plc.
