UP-FOR-SALE credit card giant MBNA has sold off a portfolio of debt for £55.7m.
Paragon Group has bought the “portfolio of closed UK consumer credit card receivables” from its cash reserves.
The portfolio consists of debt on which customers have defaulted. MBNA regularly sells off such debt.
MBNA itself, which employs more than 3,000 people in Chester, has been put up for sale by parent Bank of America. The Paragon deal is unconnected to that process.
West Midlands-based Paragon calls itself “the leading independent provider of mortgages to residential property investors”.
It said the MBNA deal would be earnings enhancing within this financial year.
Nigel Terrington, chief executive of Paragon, said: “We are extremely pleased to announce a further significant portfolio acquisition through our investment division, Idem Capital.
“This is the seventh portfolio that has been acquired by Idem and brings the total investment to date to £145.2m.
“Portfolio acquisitions have become an increasingly important part of the group's activities and Paragon's track record of loan servicing, risk management and portfolio investments position it well to exploit similar opportunities as they arise in the future.”
Bank of America put MBNA up for sale in August, raising fears over the future of the Chester site.
That month, LDP Business revealed that Virgin Money was considering a deal for MBNA. Virgin Money has a 50-50 joint venture with MBNA which represents around 35% of the Chester company’s balance sheet.
Professor Steve Broomhead, former chief executive of the Northwest Development Agency, is leading a task force that aims to help secure the future of the site.
In October, it was reported that Bank of America believed initial expressions of interest from Barclays, Virgin Money, Santander and US rival Capital One had fallen short of its expectations. But the sale process soon got back on track – and reports this week suggest that Bank of American is now mulling over four bids.
Since August, MBNA has since shed hundreds of jobs as it prepares for a sale. But in January, Bank of America said it would create up to 1,000 jobs in Chester by setting up a global technology and operations centre. The site is set to open by 2013.
