Lloyds, one of the banks responsible for the billion pound mis-sold ppi scandal has announced that it has completed a deal to buy the credit card company MBNA for £1.9 billion.
The agreement is expected to be finalized by June 2017. The deal will however have to be approved by government regulators. before getting the seal of approval. Lloyd’s purchase of MBNA will mean that the bank will control 26% of the UK’s credit card market. Which is just one point below the market share held by Barclaycard, the UK’s biggest credit card provider.
The agreement by Lloyds to purchase MBNA is a historic one, because it is the first major buy-out from Lloyds since the bank was bailed out by the UK government in 2008.
The BBC reported that the buy-out would result in savings for Lloyds.
Lloyds said the MBNA deal would bring a “significant opportunity for cost synergies”, saying it expected to make savings of £100m a year, about 30% of the credit card firm’s cost base in 2015.
The banking group has been implementing a restructuring plan, and in October this year confirmed that more than 1,200 jobs would be lost.
The cuts were part of the 9,000 job losses the bank first announced in October 2014.
The MBNA deal is the first acquisition for Lloyds since the banking giant took on collapsed bank HBOS in September 2008 in the midst of the financial crisis.
However, that deal ultimately led to the government stepping in to bail out Lloyds, and it ended up with a 43% stake.
Over the past three years, that stake has been reduced steadily by share sales to institutional investors.