Blueprint
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
(20
December 2016)
LLOYDS BANKING GROUP
plc
(Translation of registrant's name into
English)
5th Floor
25 Gresham Street
London
EC2V 7HN
United Kingdom
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports
under
cover Form 20-F or Form 40-F.
Form
20-F..X.. Form 40-F.....
Indicate
by check mark whether the registrant by furnishing the
information
contained
in this Form is also thereby furnishing the information to
the
Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes
...... No ..X..
If
"Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule
12g3-2(b):
82- ________
Index
to Exhibits
Item
No.
1 Regulatory News Service Announcement, dated 20 December
2016
re: Acquisition
of MBNA Ltd
THIS
ANNOUNCEMENT CONTAINS INSIDE INFORMATION WHICH IS
DISCLOSED
IN ACCORDANCE WITH THE MARKET ABUSE REGULATION
20
December 2016
LLOYDS BANKING GROUP TO ACQUIRE MBNA LTD FROM
BANK OF AMERICA
Lloyds
Banking Group ('the Group') today announces that it has agreed to
acquire MBNA Ltd (MBNA), a UK consumer credit card business, from
FIA Jersey Holdings Limited, a wholly owned subsidiary of Bank of
America. The transaction is consistent with the Group's stated
strategic ambitions of growing in Consumer Finance and will enable
the Group to enhance its position and offering within the UK prime
credit card market.
The
acquired MBNA business, which comprises gross assets of
c.£7bn, is expected to deliver strong financial returns and
create significant value for shareholders. The transaction is
expected to complete by the end of the first half of 2017, subject
to the receipt of competition and regulatory approval, and is
expected to deliver:
●
an underlying Return on Investment that exceeds Cost of Equity in
the first full year and increases to c.17% in the second full
year following the acquisition
●
c.3% and c.5% statutory EPS accretion in the first and second full
years following the acquisition
The
transaction will deliver a £650m per annum (c.4%) increase to
Group revenues and will enhance Group net interest margin by
c.10bps per annum. There is also significant opportunity for
cost synergies, currently expected at c.£100m run rate per
annum within 2 years, representing c.30% of the 2015 MBNA cost
base.
In the
first half of 2016 the gross assets acquired delivered post-tax
profits of £123m(1) and are being
acquired for cash consideration of £1.9bn. The purchase price
includes c.£0.8bn of acquired equity and assumes £240m
for future PPI claims, with the Group's exposure to PPI liability
capped at this amount.
MBNA is
a UK credit card business with a high quality customer base founded
upon sound underwriting principles and credit management, which
aligns well with the Group's strategy to deliver sustainable growth
through a multi-brand strategy. The MBNA brand will be maintained
as a challenger brand further enhancing our customer offering.
MBNA's diversified distribution model, along with its data
analytics capability, digital strength and well-recognised brand,
will be complementary to the Group's existing capabilities and
provides further opportunities for growth and delivering excellent
customer service. On completion of the transaction, the Group's
market share in credit cards will increase from c.15% to
c.26%.
The
transaction is being funded through organic capital generation and
is currently expected to utilise approximately 80 basis points of
Common Equity Tier 1 (CET1) capital, which through this acquisition
will further enhance future earnings and capital
generation.
(1) post-tax profit of £166m for the full year
2015.
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 per cent of sustainable earnings over the medium term.
In line with our policy, the Group's approach to surplus capital
distribution at the end of the year will give due consideration to
the Board's view of the current level of capital required to meet
regulatory requirements, cover uncertainties and grow the business,
which will include the capital impact of this
transaction.
Commenting on the
transaction, 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 business and we will focus on providing its customers with
excellent service and value. Our low cost to income ratio and
proven integration capabilities will deliver significant synergies
and value to our shareholders."
- END
-
UBS is
acting as financial adviser for Lloyds Banking Group on this
transaction.
For
further information:
Investor Relations
Douglas
Radcliffe
+44 (0) 20 7356 1571
Group
Investor Relations Director
Email:
douglas.radcliffe@finance.lloydsbanking.com
Corporate Affairs
Matt
Young
+44 (0) 20 7356 2231
Group
Corporate Affairs Director
Email:
matt.young@lloydsbanking.com
FORWARD
LOOKING STATEMENTS
This
document contains certain forward looking statements with respect
to the business, strategy and plans of Lloyds Banking Group and its
current goals and expectations relating to its future financial
condition and performance. Statements that are not historical
facts, including statements about Lloyds Banking Group's or its
directors' and/or management's beliefs and expectations, are
forward looking statements. By their nature, forward looking
statements involve risk and uncertainty because they relate to
events and depend upon circumstances that will or may occur in the
future. Factors that could cause actual business, strategy, plans
and/or results (including but not limited to the payment of
dividends) to differ materially from the plans, objectives,
expectations, estimates and intentions expressed in such forward
looking statements made by the Group or on its behalf include, but
are not limited to: general economic and business conditions in the
UK and internationally; market related trends and developments;
fluctuations in interest rates (including low or negative rates),
exchange rates, stock markets and currencies; the ability to access
sufficient sources of capital, liquidity and funding when required;
changes to the Group's credit ratings; the ability to derive cost
savings; changing customer behaviour including consumer spending,
saving and borrowing habits; changes to borrower or counterparty
credit quality; instability in the global financial markets,
including Eurozone instability, the exit by the UK from the
European Union (EU) and the potential for one or more other
countries to exit the EU or the Eurozone and the impact of any
sovereign credit rating downgrade or other sovereign financial
issues; technological changes and risks to cyber security; natural,
pandemic and other disasters, adverse weather and similar
contingencies outside the Group's control; inadequate or failed
internal or external processes or systems; acts of war, other acts
of hostility, terrorist acts and responses to those acts,
geopolitical, pandemic or other such events; changes in laws,
regulations, accounting standards or taxation, including as a
result of the exit by the UK from the EU, a further possible
referendum on Scottish independence; changes to regulatory capital
or liquidity requirements and similar contingencies outside the
Group's control; the policies, decisions and actions of
governmental or regulatory authorities or courts in the UK, the EU,
the US or elsewhere including the implementation and interpretation
of key legislation and regulation; the ability to attract and
retain senior management and other employees; requirements or
limitations on the Group as a result of HM Treasury's investment in
the Group; actions or omissions by the Group's directors,
management or employees including industrial action; changes to the
Group's post-retirement defined benefit scheme obligations; the
provision of banking operations services to TSB Banking Group plc;
the extent of any future impairment charges or write-downs caused
by, but not limited to, depressed asset valuations, market
disruptions and illiquid markets; the value and effectiveness of
any credit protection purchased by the Group; the inability to
hedge certain risks economically; the adequacy of loss reserves;
the actions of competitors, including non-bank financial services,
lending companies and digital innovators and disruptive
technologies; and exposure to regulatory or competition scrutiny,
legal, regulatory or competition proceedings, investigations or
complaints. Please refer to the latest Annual Report on Form 20-F
filed with the US Securities and Exchange Commission for a
discussion of certain factors together with examples of forward
looking statements. Except as required by any applicable law or
regulation, the forward looking statements contained in this
document are made as of today's date, and Lloyds Banking Group
expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any forward looking
statements. The information, statements and opinions contained in
this document do not constitute a public offer under any applicable
law or an offer to sell any securities or financial instruments or
any advice or recommendation with respect to such securities or
financial instruments.
UBS
Limited is authorised by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority and the Prudential
Regulation Authority in the United Kingdom. UBS Limited is acting
as financial adviser to Lloyds Banking Group and no one else for
the purpose of the transaction described herein and will not be
responsible to anyone other than Lloyds Banking Group for providing
the protections offered to clients of UBS Limited nor for providing
advice in relation to such transaction.
Signatures
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
LLOYDS
BANKING GROUP plc
(Registrant)
By: Douglas
Radcliffe
Name: Douglas
Radcliffe
Title: Group
Investor Relations Director
Date:
20 December 2016