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Lloyds completes MBNA acquisition

01 June 2017 07:23

Lloyds Banking Group has completed the acquisition of MBNA Ltd, a UK consumer credit card business, from FIA Jersey Holdings Ltd, a wholly owned subsidiary of Bank of America.

This followed receipt of regulatory and competition approval.

The group said the transaction was consistent with its stated strategic ambitions of growing in consumer finance and would enable it to enhance its position and offering within the UK prime credit card market through the MBNA brand.

It said the purchase terms were in line with those previously disclosed and the purchase was expected to deliver strong financial returns including:

- an underlying return on investment that exceeded cost of equity in the first full year and increased to c.17% in the second full year following the acquisition

- c.3% and c.5% statutory EPS accretion in the first and second full years following the acquisition

Lloyds said: "Given the transaction will enhance Group net interest margin by c.10bps per annum there will be a c.5bps benefit to net interest margin in 2017.

"The transaction has been funded through organic capital generation with c.80 basis points of Common Equity Tier 1 (CET1) capital retained on the Group's balance sheet since the end of 2016."

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