Lloyds buys MBNA and its airline credit cards ….. good news or bad?

Lloyds Bank announced yesterday that it was the winner of the auction to acquire the UK operations of credit card group MBNA from Bank of America.  It paid £1.9bn as well as taking over MBNA’s existing debt book.

MBNA is the leading UK player in so-called ‘affinity’ credit cards.  In the travel space, it runs cards for Etihad, Emirates, American, Lufthansa, United and Virgin.

Etihad credit cards

It isn’t clear at this point what Lloyds intends to do with the business.  This BBC report contains a few clues.

Apparently the MBNA brand will remain, as it is now little used outside the UK and Bank of America is not concerned about any future reputational issues infecting its remaining credit card operations.

£100m of cost savings are anticipated.  This would require MBNA to cut a huge 33% from its cost base – a staggering amount, given that a lot of costs are fixed and that cutting, say, the marketing budget would have a direct impact on future growth.

Virgin card

It isn’t clear what will happen to MBNA’s operational centre in Chester.  In a perfect world, I would like to see MBNA take over the existing Lloyds credit cards.  Anyone who has ever dealt with the Lloyds credit card people will know that they are a complete and utter shambles, and if they can be pulled up to MBNA’s levels of service then this would be great news.

Unfortunately, there is a risk that it works in reverse and that the existing MBNA operation is merged into the current Lloyds network.

Emirates Elite cards

It is not a surprise that the two credit card companies in the UK which offer high levels of service are those which are focussed exclusively on credit cards – ie American Express and MBNA.  For Lloyds and Barclays, their credit card operations are a modest part of what they do and cost cutting is generally given a higher priority than customer satisfaction.

We’ll see.  The deal will take some time to close and it will be a number of years before there are any noticeable changes in how MBNA operates.  MBNA has already cut back on, although not stopped, aggressive sign-up promotions following the caps on interchange fees this year.  It must be losing money on some of its current travel card contracts given the generous mileage benefits paid out.  It’s not as if Head for Points readers are likely to be paying interest on their balances.

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Comments

  1. “Cost synergies are expected to be significant as Lloyds integrates MBNA into the bank’s existing infrastructure. Lloyds has pencilled-in £100m in annual cost synergies from the integration of the business within two years,” from iii.co.uk discussion board.

  2. Long term, Is there a risk that Lloyds will look at the mbna and lloyds cards issued to an individual as through one lender (Lloyds) and so restrict how many cards you can hold? I already hold Lloyds Avios, wonder how they view then applying for an MBNA card (or holding multiple MBNA cards as is now the case).

    • Yes, this is a risk as Lloyds will want to limit its exposure to any one person.

    • MBNA seem a bit stingy when it comes to credit limits as when I opened another Virgin White card, they wanted to take some of my Virgin Black limit. Amex on the other hand are more than happy for you to have huge aggregate limits across all of their cards.

      • My experience is the exact opposite!

      • Graham Walsh says:

        Same here, had 20k on the black card and when I got the white card, moved the 20k that and 10k on the black. Have since churned the white card. All my spending goes on the black card but haven’t hit the limit yet anyway. Shifting spend to Amex Gold to hit the 10k bonus MR now for the next few months. Then what will be the next card? I’ll need to keep the Virgin Black to get my 241 and PE upgrades until they post to my account next May.

    • Lady London says:

      In the same way, if they merge the banking licences of two institutions, the single cap for one licence (covering your risk of loss if the institution goes under), is only about £85,000 these days.

  3. I love the Lloyds credit card team. They always offer exceedingly generous levels of compensation to me whenever something goes wrong.

    • It’s great – I’ve had two payouts, both made when I didn’t even think it warranted compensation!

    • Yes, I got £200 for a 4 month delay in avios turning up and 2 calls to customer services to sort it out. Of course, if I’d really needed them for an immediate redemption I would have been scuppered by it.

  4. Although all the PR that will come out will say “MBNA will remain independent” and “Staff will not be displaced”, this is misguided. Of course staff cuts will happen, marketing budgets slashed, etc…

    In some cases this isn’t bad…MBNA have too many senior level people on big salaries (living in Chester which doesn’t have the same living costs as London). Time to remove those people and beef up the lower level managerial staff (who actually do the work / speak to you on the phone). And also allocate some of those savings to cardholders with offers.

  5. Eariier this year I took out the Lloyds avios card expecting no end of drama given reports on HFP. To my surprise everything went like clockwork and they even forgot to switch off my double avios after 6 months which was very welcome with the demise of DC cards. Then earlier this month it all started to go horribly wrong, I could not use the card online without transactions getting declined and blocked, they seem to have some odd system to approve transactions within 5 minutes which does not work and who could live with it anyway, sometime later an automated call from fraud prevention but no chance to talk with somebody in person. After three such cycles my card was determined to be faulty, closed, and I’m waiting for another to be reissued ( hopefully 6 months more doublev avios). A formal complaint was raised but I’m still waiting to hear from them. I think I might just pass on the card and get BAPP for the first time when I’m eligible in March. I’m expecting a very substantial refund on tbe card for a cancelled flight and now dreading further drama given the card in question was closed and reissued.

  6. I guess each person will be impacted differently. For me this is frankly terrible news. Lloyds seem to hate me – they won’t budge on my credit limit of £2900. MBNA on the other hand currently assign me £25k.

    Lloyds’ £11m a year serial womaniser CEO will want cost cuts at MBNA so I’d assume they’ll move that book onto their own ghastly systems then close Chester piling even more calls into their existing over worked call centres.

    This isn’t good news for anyone except Lloyds shareholders. In my view.

    • I have the same very low limit with Lloyds, no matter what they won’t put it above £3k. I like the avios rate so have to make regular payments to keep under the credit limit, especially at this time of year! My Virgin Atlantic Limit is around £15k but I don’t use that as much as I get more avios per £1 than with Virgin.

      • Infuriating isn’t it? I had to keep doing it by phone from the US because there’s no clear way to make manual payments from their website. It only become apparent when I complained that it’s possible to do a bank transfer.

      • Had no such issues. Got issued £23k limited on my Lloyds card. I asked them to move it down.

        I have never had issues with payments. You can pay via bank transfer.

    • Lady London says:

      And if we’re really unlucky they’ll brand the current Lloyds service as “MBNA”. They may have just bought the brand, and not be planning to keep any of the rest?

  7. Peter Hart says:

    I posted this the other day in response to a Shop Small post, so forgive me for putting it here too where it suddenly seems very appropriate:

    I just spent 50 minutes on the phone to Lloyds re the Lloyds-issued Amex arguing my case on an uncredited Shop Small purchase and also two stores that denied the card. I had previously registered the card as per the Shop Small Lloyds-specific link. The handler knew nothing of the promotion so I ended up raising an official complaint, but he still insisted I needed to speak to Amex directly, even though I explained they’d have no access to my Lloyds/Amex details.

    How can things be so easy when dealing with Amex over the missed/denied credits yet so difficult with a banking partner? I’m actually shocked at Lloyds attitude – they just kept insisting it was nothing to do with them and Lloyds were “just an introducer”.

    The ultimate insult was Lloyds insisting that, as I’m already an Amex customer through the BA Amex card, I could speak to them and they’d know what I was talking about.

    Give me strength…

    Incidentally – I had no problem getting any missing Shop Small credits directly from Amex for the charge card issued by them!
    Reply
    ← Older Comments

    • Here is the way to claim for non payment of statement crdits on Amex cards issued by Lloyds, MBNA etc.
      https://www316.americanexpress.com/iFormsSecure/un/iforms.do?cuid=contactUs_en_GB&evtsrc=link&evttype=0
      Amex told me to wait 21 days. but other CS people have credited immediately.

    • Completely agree -losing the will on this one…i have just spent 45 mins on the phone to Lloyds & Amex. Called Lloyds first who said nothing they can do i need to call Amex. Amex CSR refered me back to Lloyds as “…its their card….” Called Lloyds again and the CSR kept me holding whilst he called several depts including Avios team “as they maintain the relationship with Amex…” But no joy -the CSR came back with “….you need to speak with Amex ….as its their promotion not Lloyds….”

      Ready to give up but as a last effort i have logged it on link above so hopefully that will bring some results

      (As mentioned Amex also sorted it immediately when i contacted them about a similar issue with my BA card)

      • UPDATE:
        Email received from Amex Connect

        Dear Cardmemer,
        Thank you for inquiry.

        We do apologise for the inconvenience caused and that for time that has been wasted.

        I have credited your card ending XXXX with £5.

        I have also forwarded the issue to the relevant team.

        Kind regards
        American Express Connect

  8. Also have major problems with Lloyds IT systems. I applied for the Duo card online (Rob sent me a referral link, but that never came through). I didn’t hear back with regards to my application for 3 weeks so I rang them up. Apparently my application went through 3 times so it got rejected.

    The lady on the phone offered to do my application on a call, so I spent 20mins doing that.

    I waited 3 weeks, heard nothing and was told there is a problem with my application and I should go into a branch for an application.

    pretty painful just to apply to get a card! I’ve now given up applying.

    The MBNA guys have always been excellent and have decent IT systems.

  9. I signed up for the Lloyds AVIOS Amex and they are utterly useless. Assigned a pathetic credit limit of £1K and I had to go through a formal complaints procedure to get them to raise it in line with all my other credit card providers. Either they are extremely risk averse in terms of providing credit or just utterly incompetent. Also took them a month to send out my PIN and internet banking login details which meant I wasn’t able to take advantage of 0% FX whilst on holiday (reason why I took out the card 2 weeks prior to this). Waste of time and energy.

    • I think Lloyds have a fairly standard policy of a small initial credit limit, then they choose who gets more. Most people seem to start on somewhere between £1k and £1.5k. Officially they say they will consider a limit increase after 6 months, but some have been offered earlier.

      I think that’s fair, it makes sense to start people on a low limit and validate whether they are a good customer before increasing potential risk, especialy if there is no prior relationship to work from.

      • My wife and I as new customers to Lloyds (though not LBG as we had existing relationship with Halifax) got initial limits much greater than what you state.

      • My limit has been 6k from the start. The application form I completed online asked what a useful limit would be and I got what I requested.

  10. Touch wood had no problems with my Lloyds duo Avios cards. As we bank with Lloyds and have done for over 40 years , although as now retired do not have a large balance with them. I was given £8500 credit limit and hubby was given £10,000. We do not even have a large retirement income coming in and also have several other cc, plus a large mortgage go figure?

  11. Interestingly IM postcodes are classed as being outside the UK so Lloyds wont accept applicartions whereas no such problems with MBNA. This could reulst in customers in the channel islands and IOM being unable to apply for any mbna cards or even having existing accounts closed

    • They’re not wrong in classifying IoM outside the UK – “As a Crown dependency, the Isle of Man is not part of the United Kingdom or European Union. The Tynwald passes its own legislation with the assent of the Crown granted in the Privy Council”.
      Source – http://www.bbc.co.uk/news/world-europe-18251379

      It is part of the British Isles but not UK. Evidently MBNA didn’t mind that but Lloyds are correct in this case.

      Although Lloyds are still rubbish! I had no end of problems getting my Avios credited and it took 8 months for it to be done properly. I’ve never been able to use chip and pin though. I’ve had numerous resets and spoken to the fraud team who said a block had been put on it but they had removed that block… I’ve given up and just cross my fingers that I can sign for transactions overseas.

      • Guesswho2000 says:

        Also, MBNA currently, specifically state that you can keep their cards if you reside outside the UK (although not apply for them) – I’ve got AA and Etihad, and I live in Australia, so we’ll see what happens with them. There’s no AA or SPG card here, and I use it to keep my AAdvantage balance alive, so I hope they let me keep it!

  12. Isabel Friedlander says:

    Interestingly I recently used a 0% balance transfer offer through the AA which is an MBNA card. and offered a long 0% period, as long as one didn’t spend on it, so why not!? When an error was made concerning the fee (which should not have been charged), the Bank of Ireland were the contact point. It will be interesting to see how this shapes with LLoyds?

  13. OT- but CC related.

    Has anyone received both tranches of 20K nectar points (from Amex and Nectar themselves) for spending 2K on card opened in OCT?

    I have only received Amex and not Nectar. How long does it take for Nectar to credit after Amex has credited Nectar points? Hope one does not need to chase up for the point credit.

    • I have received both, without any need for customer service contact, within a few days of each other.

    • 20k from Amex posted then the 20k from Nectar arrived 4 days later, with no intervention from CS (although they were saying it wouldn’t be until the 3rd card statement)

  14. Slightly OT, but has anyone had any experience of MBNA not awarding the Virgin Premium upgrade vouchers if cancelling the card at the end of the year?

    My renewal date for the card is 4th March 17. I’ve been told by MBNA that if i cancel before then – even on the 3rd March which is effectively the last day of this year’s membership – I will not be entitled to receive the upgrade vouchers. Only if I cancel after the 4th March, but after I’ve paid another £140 annual fee will i be entitled to receive the vouchers.

    Cant see any mention of this policy in T&Cs, has this happened to anyone before? It seems to defy logic that to retain benefits for the previous year’s membership, I need to renew for a further year.

    Thanks

    • Let the new membership year start, upgrade will be issued, don’t use the card at all in the new year then call to cancel and get refund of fee. If any issues then the ombudsman would take a strong stance.

  15. I fully expect Lloyds to slash the miles collected on Virgin Atlantic Cards.
    Especially with Virgin miles redemption changing.
    Would not be surprised to see something like 1 mile for every £4 on the non Amex card.