// Tesco Bank to be bought by Lloyds Banking Group in £3.8bn deal
// Tesco Bank aims to move over 23,000 mortgage customers over to Lloyds’ subsidiary Halifax by end of September
Tesco Bank’s £3.8 billion UK residential mortgage portfolio will be bought by Lloyds Banking Group, in order to strengthen its position in the UK’s competitive market for home loans.
Lloyds beat high street competitors including Santander and Royal Bank of Scotland to secure the portfolio.
Under the ownership of Tesco Bank, the portfolio generated income of around £81 million and a pre-tax profit of around £9 million in the year to February 28.
Tesco Bank aims to move over 23,000 mortgage customers over to Lloyds’ subsidiary Halifax by the end of September.
In May this year, Tesco Bank announced it would stop lending on new mortgages and said it planned to sell off its existing portfolio.
“Our focus is on how we best serve Tesco customers and align our resources effectively to their needs, while ensuring that our offer remains sustainable in the long term,” Tesco Bank chief executive Gerry Mallon said.
“As a result, we made the decision to move away from our mortgage offering.
“Our priority throughout has been to complete a commercially acceptable transaction with a purchaser who will continue to serve our customers well.”
Lloyds Banking Group group director of retail, Vim Maru said: “This is a good deal for the group, our shareholders and Tesco’s mortgage customers.
“We believe our Halifax brand will make a good home for these customers and we look forward to welcoming them to the group.”