Consumer group frets as Lloyds takes on indebted MBNA
Lloyds Bank has acquired MBNA, a credit card business which offers some of the industry's longest interest-free credit cards and had £7.5bn ($9.7bn) of debt on its books at the end of last year. The firm has some 5 million customers, and its deal with Lloyds will give the bank a 26% share of the credit card market. Consumer advocacy groups have voiced concerns about MBNA's lending practices. "I’m not sure that the regulators have done enough to ensure this money is being handed out to people who can afford it," said James Daley of campaign group Fairer Finance. 
Campaigners have attacked Lloyds for buying a credit card business that targets consumers aggressively with long-term offers.

The bank is set to acquire MBNA for £1.9 billion in what will be its first takeover since it was rescued by taxpayers at the height of the financial crisis.

But although bosses see it as a major milestone, consumer groups warned the deal could mark a return to sharp practices used to saddle shoppers with debt.

Campaigners have attacked Lloyds for buying a credit card business that targets consumers aggressively with long-term offers

MBNA - owned by Bank of America Merrill Lynch - offers some of the longest interest-free credit card periods on the market and is sitting on £7.5 billion of consumer debt, of which £923.8 million is at risk of not being repaid.

It provides a rival- beating grace period on balance transfers of up to 43 months, encouraging borrowers to transfer debt from other cards, and there is a card offering 0pc interest on purchases for 29 months.

James Daley of campaign group Fairer Finance said: ‘Zero per cent deals are a ticking timebomb. They feed our addiction to short-term credit and I worry about lenders handing out credit to anyone who asks for it.

‘I’m not sure that the regulators have done enough to ensure this money is being handed out to people who can afford it.’

MBNA had £7.5 billion of debt on its books at the end of 2016, and boasted that this was 10 per cent higher than a year earlier due to ‘competitive campaigns targeting new and existing customers’.

It lost £151 million from customers unable to pay the business back, up 21 per cent on 2015, although bosses insisted that the quality of their lending remained high.

Another £772.7 million was showing some signs of trouble, accounts filed with Companies House reveal.

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Last year, the company took a £164 million hit from the PPI mis-selling scandal, on top of a £211 million bill for the previous 12 months.

MBNA is known for adverts featuring so-called ‘payment ninjas’ in their 20s - although sources insist the firm doesn’t target young people excessively.

It also flogs branded cards through deals with football clubs including Arsenal, Chelsea and Liverpool, and offers rewards cards giving spenders air miles and shopping gift vouchers.

MBNA has around 5 million customers and the sale will give Lloyds a 26 per cent share of the market – just 1 per cent less than Barclaycard, the biggest player.

This means more than half the market will be controlled by two businesses, sparking concerns they could put the squeeze on consumers.

The Competition and Markets Authority decided last week that it did not need to investigate the deal in more detail.

A Lloyds spokesman said: ‘We are a responsible lender with strict lending criteria on all applications for credit.’

An MBNA spokesman said: ‘Our focus is always on providing the right product to the right customer to suit their needs and their personal circumstances.’

The tie-up comes amid growing concern over Britain’s pile of debt.

Families owe a record £67.3 billion on their credit cards, or around £2,500 per household.