Lloyds TSB has boosted its motor finance division by snapping up rival Standard Chartered's consumer finance and contract hire business for £627 million.

The deal will allow Standard Chartered to fund a £880 million acquisition of the Hong Kong credit cards and banking business from banking giant The Chase Manhattan Bank.

For Lloyds TSB, the buy will add to its UDT motor finance subsidiary, which runs Black Horse vehicle management and fleet hire services.

John Davies, managing director of Lloyds TSB asset finance division, said: "This deal allows us to consolidate our position as market leader in the motor finance business and become one of the leading contract hire providers."

He added the bank would also create "significant cost synergies" from the deal, allowing it to become "one of the lowest cost providers in the market."

Putting the two businesses together however could involve job cuts among overlapping staff. UDT employs around 2,100 staff, while the businesses being bought employ 1,800.

Commenting on the sale, Standard Chartered's chief executive Rana Talwar said: "This sale is entirely in line with Standard Chartered's strategy to build the leading emerging markets bank.

"Chartered Trust is an excellently-run business with great potential for growth in the UK and the rest of Europe."

The cash raised will part fund the buy of The Chase Manhattan Bank's card company and Hong Kong-based retail banking business, while Standard Chartered is also raising £450 million by way of a share placing to fund the remainder of the deal.

The bank said the acquisition would establish it as "by far the largest credit card operator in Hong Kong".