Lloyds To Acquire UK Consumer Credit Card Business From FIA - Quick Facts

(RTTNews) - Lloyds Banking Group plc (LLOY.L, LYG) announced it has agreed to acquire MBNA Ltd (MBNA), a UK consumer credit card business, from FIA Jersey Holdings Limited, a subsidiary of Bank of America. The gross assets are being acquired for cash consideration of 1.9 billion pounds. The purchase price includes approximately 0.8 billion pounds of acquired equity and assumes 240 million pounds for future PPI claims.

Lloyds expects the transaction to deliver: an underlying Return on Investment that exceeds Cost of Equity in the first full year and increases to approximately 17% in the second full year following the acquisition; and approximately 3% and 5% statutory EPS accretion in the first and second full years following the acquisition. Lloyds said the transaction will deliver a 650 million pounds per annum increase to Group revenues and will enhance Group net interest margin by approximately 10bps per annum. There is also significant opportunity for cost synergies, currently expected at approximately 100 million pounds run rate per annum within 2 years.

The acquired MBNA business comprises gross assets of approximately 7 billion pounds. In the first half of 2016, the gross assets acquired delivered post-tax profits of 123 million pounds. The transaction is expected to complete by the end of the first half of 2017.

António Horta-Osório, Group Chief Executive, said: "The acquisition, funded through strong internal capital generation, increases our participation in the expanding UK credit card market with a multi-brand strategy and advances our strategic aim to deliver sustainable growth as a UK focused retail and commercial bank. The MBNA brand and portfolio are a good fit with our existing card busines."

Lloyds said the Group continues to deliver strong underlying and statutory performance with strong capital generation. As a result, the Group remains confident in delivering a progressive and sustainable ordinary dividend in 2016 and continues to target a payout ratio of at least 50 percent of sustainable earnings over the medium term.