The UK Competition and Markets Authority (CMA) is set to investigate Lloyds Banking Group’s (LON:LLOY) purchase of Bank of America’s credit card business MBNA, the watchdog has said. The FTSE 100 lender, bailed out by the UK government during the financial crisis, announced the £1.9-billion deal in December, with the move marking the group’s first acquisition since its disastrous takeover of HBOS back in 2009.
Lloyds’ share price has gained ground in London in today’s session, having added 0.39 percent to 69.85p as of 09:18 GMT, and outperforming the benchmark FTSE 100 index which has slipped marginally into the red and is currently 0.06 percent worse off at 7,411.85 points. The group’s shares are up by more than 11 percent this year, but continue to trade below the taxpayer’s break-even price of 73.6p.
The CMA announced yesterday that it had launched a phase-one investigation into Lloyds’ purchase of credit card company MBNA, considering whether the acquisition could “result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services”. The watchdog said that it will decide by May 16 whether to refer the deal to a more extensive phase two investigation.
The Telegraph reported in its coverage of the news that insiders at Lloyds had expected the CMA to investigate the deal, which marks the bailed-out lender’s first acquisition since its ill-fated takeover of HBOS at the depths of the financial crisis.
The MBNA purchase is largely seen as another milestone in Lloyds’ recovery, with the bank having returned to profit and restored its dividend payments. The government meanwhile has been trimming its stake in the lender and currently holds just under three percent in Lloyds following its latest share sale, announced earlier this week.