Lloyds Banking Group has agreed to buy Tesco Bank's mortgage book in a £3.8bn deal.
The deal will see more than 23,000 residential mortgage customers transfer to Lloyds-owned business Halifax in a move cementing the bank's position as Britain's biggest lender. Lloyds will pay a 2.5% premium compared to the loans' outstanding book value
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."
This is a good deal for the group, our shareholders, and Tesco’s mortgage customers"
Britain's biggest supermarket chain Tesco said in May this year its banking unit would cease mortgage lending, citing cut-throat competition that has squeezed profits for lenders across the 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."
A raft of new banks and rules pushing established players to lend more have increased the supply of mortgages.
HSBC UK's chief executive told the Financial Times this week that it was aiming to increase its lending by £35bn, compared to a £16bn expansion over the past few years.