Lloyds share price: Group asked to submit revised offer for MBNA

on Oct 6, 2016
Updated: Oct 21, 2019

Lloyds Banking Group (LON:LLOY) has been asked to submit a revised offer for credit card issuer MBNA, Sky News has revealed. The newswire further reports that bidders for the business have been trying to persuade Bank of America to indemnify them against future payment protection insurance (PPI) claims.

Lloyds’ share price has jumped in London in today’s session, having added 1.28 percent to 55.40p, and outperforming the blue-chip FTSE 100 index which has slipped marginally into the red and currently stands 0.13 percent lower at 7,024.15p. Despite today’s advance, the lender’s shares have lost nearly a fifth of their value this year, and continue to trade well below the taxpayer’s break-even price of 73.6p.
Sky News reported last night that Lloyds and investment firm Cerberus had been asked to submit revised offers for MBNA in about a fortnight amid stiff competition to acquire the business. Sources further told the newswire that a number of the bidders had been seeking to negotiate an indemnity for PPI costs with MBNA owner Bank of America (BoA).
While the BoA has reportedly rejected the attempts, the absence of a PPI indemnity is likely to affect the price that bidders are ultimately likely to pay for the credit card giant. Lloyds has the biggest PPI bill so far, having sold more such policies than any of its peers.
Sky News notes that the FTSE 100 group’s intention to make an offer for MBNA has prompted warnings from some City analysts that a deal could undermine the lender’s desire to pay a special dividend to shareholders at the end of the year.
In analyst ratings, Barclays reiterated its ‘equal weight’ stance on Lloyds today, valuing the shares at 65p. BNP Paribas meanwhile remains bearish on the bailed-out lender with an ‘underperform’ rating, and a price target of 52p.
As of 15:05 BST, Thursday, 06 October, Lloyds Banking Group share price is 59.42p.

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