Lloyds buys Tesco Bank’s mortgage book in £3.8bn deal

Lloyds Banking Group has agreed to buy Tesco Bank's mortgage book in a £3.8bn deal, after a vicious price war led the latter to abandon the mortgage market. Lloyds will pay a 2.5 per cent premium compared to the loans' outstanding book value, with Tesco's 23,000 customers transferring to Lloyds subsidiary Halifax. Vim Maru, Lloyds director of retail, 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." Tesco announced its plan to stop new lending and sell its existing mortgage loans in May, blaming "Challenging market conditions" that have driven down profit margins across the entire British banking sector. Gerry Mallon, Tesco Bank chief executive, said: "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."

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