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Lloyds Banking (LYG) - Get Lloyds Banking Group Plc Report said Tuesday that it will purchase MBNA, the U.K. consumer credit card subsidiary of Bank of America (BAC) - Get Bank of America Corp Report, for £1.9 billion ($2.4 billion).

MBNA has assets of around £7 billion, Lloyds said in a statement, and is expected to deliver "strong financial returns and create significant value for shareholders." Lloyds said the deal is expected to close in the first half of next year and will provide a £650 million in annual increase to group revenues. MBNA booked £123 million in first half profits this year.

"The acquisition increases our participation in the expanding UK credit card market with a multi-brand strategy and advances our strategic aim to deliver sustainable growth as a UK focused retail and commercial bank," said CEO Antonio Horta-Osorio. "The MBNA brand and portfolio are a good fit with our existing card business and we will focus on providing its customers with excellent service and value. Our low cost to income ratio and proven integration capabilities will deliver significant synergies and value to our shareholders."

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Lloyds said the deal will be funded by organic capital and will likely use around 80 basis points of the bank's common equity tier 1 capital. The purchase will also assume around £240 million in potential PPI mis-selling claims, Lloyds said. 

Lloyds shares rose 1.33% at the start of trading Tuesday to at 63.39 pence each, extending their three-month gain to around 12.2%.