Lloyds acquires Tesco Bank mortgage portfolio in £3.8bn deal

Banking giant Lloyds Banking Group has acquired the residential mortgage portfolio of Tesco Bank in a £3.8bn acquisition.

The portfolio, which has a lending balance of around £3.7bn, will be transferred to the Halifax brand, with beneficial ownership transferring at the end of September 2019 and legal title by the end of March 2020.

In a statement issued this morning, Lloyds Banking Group commented: “We welcome over 23,000 mortgage customers who will be transitioning from Tesco Bank. Halifax has a proven track record in serving and supporting mortgage borrowers across the UK.

“The acquired portfolio will generate good returns to the group in excess of current organic market opportunities, while delivering open mortgage book growth within the group’s low risk strategy and providing additional flexibility in participation choices in the mortgage market.”

The news comes after Tesco Bank announced its decision to stop new mortgage lending while exploring sale options for its portfolio back in May.

Commenting on the sale, Gerry Mallon, Tesco Bank chief executive, added: “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.

“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.

“After a thorough process, we are pleased to confirm that we have agreed the sale of our mortgage book to Lloyds Banking Group, operating under the Halifax brand. We are confident that they will continue to provide our customers with an excellent customer experience.”