In a face-off with rivals, Lloyds Banking Group has had a hard fight to finally snap up Tesco Bank’s mortgage business for approximately ₤3.8 Billion. Because of this deal, more than 23,000 residential mortgage customers will transfer to Lloyds-owned business Halifax, cementing its title as Britain’s biggest money lender. The sale of the portfolio is expected to be completed by March next year. I t has a lending balance of around ₤3.7Billion currently.
The move was initiated after Tesco Bank said in May that it was halting its new mortgage lending and putting the business up on sale due to challenging marketing conditions in the United States.
Gary Mallon, Tesco Bank Chief Executive said that their focus was on how they could best serve Tesco customers and align their resources effectively to their needs, while ensuring that their offer remains sustainable in the long term. As a result, they decided to move away from the mortgage offering and move to a purchaser who will continue to serve their customers further. But there has been cause for concern among Tesco Bank’s home loan customers that this move will discontinue their ability to earn Tesco Clubcard loyalty point through mortgage payments.
In order to land the portfolio, Lloyds had to beat major high street competitors in the likes of Santander and Royal Bank of Scotland. Mortgage lenders have been hit by intense competition in the market in recent times. This competition has come bearing fruits to borrowers as they enjoy lower rates, but the smaller lenders face grim consequences.