Lloyds Banking Group plc (LON:LLOY) today announced that it has completed the acquisition of MBNA Ltd (MBNA), a UK consumer credit card business, from FIA Jersey Holdings Limited, a wholly owned subsidiary of Bank of America, following receipt of regulatory and competition approval.
The transaction is consistent with the Group’s stated strategic ambitions of growing in Consumer Finance and will enable the Group to enhance its position and offering within the UK prime credit card market through the MBNA brand. The purchase terms are in line with those previously disclosed and the purchase is expected to deliver strong financial returns including:
· an underlying Return on Investment that exceeds Cost of Equity in the first full year and increases 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
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.
Commenting on the transaction, António Horta-Osório, Lloyds Banking Group plc Chief Executive, said: “The acquisition, which is funded through strong internal capital generation, 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. 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.”
