The Financial Times is speculating that Lloyds Banking Group is in pole position to take over Chester -based MBNA’s £7bn credit card operation.

One source was quoted as saying most of the 1,700 workforce, located at Chester Business Park, could be laid off if a deal is struck with Lloyds but this has not been confirmed.

Banking editor Martin Arnold reported that two people briefed on the process said Lloyds had moved ahead of US private equity group Cerberus in the bidding for MBNA, which is owned by Bank of America (BofA).

He said Lloyds had initially pulled back from the auction because of BofA's refusal to share the future costs of compensating customers for mis-selling payment protection insurance. But BofA had now agreed to indemnify the buyer if PPI costs rise above a fixed cap.

Mr Arnold wrote: “A sale to Lloyds could be bad news for Chester, where the MBNA business is based. The UK bank is likely to transfer MBNA’s customers to its own systems and lay off many of its 1,700 staff, mostly based in the town, one person said.”

However, MBNA is keen to point out the story is ‘just the latest piece of speculation’ about the business with the rumoured suggestion that Lloyds may abandon Chester being based on the hearsay of just ‘one person’.

An MBNA spokesman said: “This story is speculation – and we never comment on speculation.”

A Lloyds Banking Group spokesman added: “We do not comment on market speculation.”

Chester MP Chris Matheson

Chester MP Chris Matheson , who studied economics and politics at the world famous London School of Economics, is remaining vigilant.

He said: “We remain a centre for financial services and I will be battling to retain that. MBNA is the anchor business on the business park and we have to retain a critical mass of capacity.

“In addition, their generosity and support for community activities right across the city is immense from charities and community groups to the football and rugby clubs. We cannot underestimate the contribution they make to the city.”

MBNA is owned by Bank of America Merrill Lynch which has a separate base on the business park.

This is not the first time MBNA has been put up for sale.

The credit card business went to the market in 2011-12 but the sale was postponed, believed to be due to ‘market conditions’.

Virgin Money, which had a 50-50 joint venture with MBNA, was reported to be close to sealing a deal to buy part of the business at that time. And it was claimed Barclaycard had been interested in snapping up what was left of the portfolio.

Virgin later bought £1bn credit card assets from MBNA when it launched its own credit card business in 2015 after taking over Northern Rock building society.

The rival finance house eventually moved into Gorse Stacks House next to the block housing the NHS Fountains medical centre in the city centre.