Market preparing for bidding war

Lloyds and Virgin ready for £8bn battle over MBNA

MBNALloyds Banking Group and Virgin Money could be pitched into an £8 billion takeover battle for credit card firm MBNA.

The two banks are expected to join the competition to buy the Chester-based lender from Bank of America. Barclays and Santander may also be keeping a watching brief.

A bid would represent the first attempted acquisition by Lloyds since the financial crisis, while Virgin would see it as a transformational deal.

Both are attracted to MBNA by current consumer lending. UK consumers owe £1.9 billion in loans and credit cards, the highest figure for 11 years.

MBNA has 5m credit card customers and an 11% market share. It made a £166m profit last year.

Lloyds will also see its ability to lodge a substantial bid as another sign of its revival. The bank is back in profit and and restarted dividend payments. The government has indicated that it will revive the sale of its remaining 9.2% stake.

Edinburgh and Newcastle based Virgin Money has been developing its credit cards business with an irreverent tone, launching cards featuring punk band, the Sex Pistols.

But its growth into a £1.6bn business still makes it a relative minnow among its more established high street rivals.

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