Bidding war for MBNA hots up
THE bidding war for credit card issuer MBNA has intensified with HSBC set to become the third of the UK’s biggest high street banks to enter the fray.
HSBC is preparing to make an offer for MBNA ahead of the deadline set by the company’s advisers next week, Sky News has reported.
Lloyds Banking Group and Santander are among other contenders to buy the business. Interest has increased in the wake of the Brexit vote amid speculation MBNA’s price tag would be slashed.
Sky said details of HSBC’s prospective bid, and the strategic rationale underpinning it, were unclear, although sources close to the sale process confirmed its interest.
Santander UK’s involvement in the auction was revealed earlier this week, with the Spanish-owned bank bidding to strengthen its plans to deal with far-reaching industry reforms due to be implemented in 2019.
MBNA’s £7bn credit card book would sit within the non-ring-fenced bank, potentially making it easier for it to attract an investment grade credit rating, say insiders.
Sources also suggest that such a move on MBNA could cast doubt on Santander UK’s interest in buying a separate set of assets from the state-backed Royal Bank of Scotland.
Lloyds is also poised to make offer for MBNA, although some analysts have warned that such a substantial acquisition could undermine its desire to pay a special dividend to shareholders at the end of the year.
Meanwhile, several private equity firms, including Cinven and CVC Capital Partners – which have teamed up to make an offer – are also expressing interest in MBNA, which has a receivables portfolio worth about £7bn.
MBNA’s owner BoA is said to be keen to agree a deal within months.
MBNA published reduced profit forecasts in July, after an initial freeze in financing markets whenJune’s EU referendum led BoA to consider aborting the auction.
MBNA’s loan book is equivalent to roughly 11% of the UK credit card market, and it has more than 1,500 staff at its base in Chester.
The company has more than five million UK customers, and issues cards under the brands of dozens of partners such as Virgin Atlantic Airways and the Premier League football clubs Arsenal and Liverpool.
MBNA says it made a profit of £166m in 2015.
HSBC and MBNA have declined to comment.
