Lloyds Banking Group has today (June 1) officially taken over the Chester-based MBNA credit card business after receiving regulatory and competition approvals.
Lloyds bought the company from Bank of America in a £1.9bn deal announced in December.
Lloyds has taken over the Chester Business Park operation lock, stock and barrel including not only the customer base and MBNA brand but the workforce, buildings, furniture and computers showing commitment to the Chester site. The move elevates the company’s presence in the UK credit card game from 15% to 26% market share with Barclays as its main competitor.
However, the take-over is bound to create unease among the 1,700-strong workforce because Lloyds previously talked of a ‘significant opportunity for cost synergies’, currently expected to be around £100m per annum within two years, representing about 30% of the MBNA cost base.
One personnel change has already taken place after it was announced MBNA chief executive Ian O'Doherty, who has been with the business 25 years, had made ‘a personal decision’ to leave the company at the end of June.
Current chief finance officer Elyn Corfield will become the new top manager in Chester but in the role of managing director following a phased take-over from Mr O’Doherty.
The rest of the existing management team remains in place.
And a visible change to the outside world is that the flag in front of the building which had displayed the logo of former owners Bank of America has been swapped for one representing the new owners.
Commenting on the transaction, António Horta-Osório, Lloyds group 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.”
Lloyds was already represented in Chester with an operation at Hoole Lane but Chester Labour parliamentary candidate Chris Matheson, who is seeking re-election, says it is ‘a different business’ to the credit card operation so there is no duplication locally.
MBNA says there is a commitment to continue its support for good causes, schools, local sport and community initiatives through its charitable foundation, sponsorship deals and volunteering programme.
And there is no impact on current sponsorship deals with, for example, Chester FC and the new Storyhouse theatre.