Lloyds TSB has offloaded its Goldfish credit card business to Morgan Stanley a little more than two years after buying it out from joint venture partner Centrica.
Morgan Stanley is paying £175 million for the business as well as covering balances of £800 million. This represents a decent return for Lloyds (LLOY) which paid £112.5 million for the 70% of Goldfish it did not own in 2003. Lloyds will also include a £70 million pre-tax profit from the Goldfish business in its figures for this financial year.
UK retail banking boss Terri Dial said: 'Having reviewed our credit card business, I am convinced our strategy going forward should focus on growing our core franchise. The sale of Goldfish reflects our desire to concentrate on growing our Lloyds TSB branded credit card business.'
Dresdner Kleinwort Wasserstein's Ian Gordon thinks the deal is a good one for Lloyds. He has maintained his hold rating and 490p price target and said: 'All it [Goldfish] has done is contribute to retail bad debts. I think Lloyds thought they could cross-sell products to Goldfish customers. One can only assume Morgan Stanley thinks it can do this more efficiently.'
Fellow broker WestLB reckons the price looks like a good one for Lloyds but also questions why Lloyds is selling after setting its stall out to restructure in the UK in recent years. It is neutral on Lloyds with a 480.5p price target.
Lloyds' shares are up 2.25p at 488.75p.
Last week the UK's fifth largest bank said trading for the year was in line with market expectations and pre-tax profits would be around £3.3 billion. However bad debt provisions are on the rise as consumers struggle under the debt burden built up over recent years, resulting in an extra £300 million of charges.
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