LLOYDS Banking Group has fended off a raft of rivals to buy Tesco Bank’s mortgage business for around £3.8 billion.

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.

The sale of the portfolio, which has a lending balance of around £3.7bn, is expected to be completed by the end of March next year, but customers will start being transferred over later this month.

Tesco Bank said customers will stop accruing Clubcard loyalty points on their mortgage repayments from September 27 following the transfer to Lloyds-owned Halifax, but will be offered a lump sum in November "to say thanks for being a Tesco Bank customer".

READ MORE: Jobs in doubt as Edinburgh-based bank quits mortgages

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.”

It comes after Tesco Bank said in May it was stopping new mortgage lending and put the business up for sale amid challenging market conditions.

READ MORE: Is Tesco Bank’s withdrawal from the mortgage market bad for borrowers?

It was a move that cast doubt on jobs in Scotland as it emerged 10 in the bank’s mortgage department would be directly affected, and the position of 140 employees at out-sourcer Capita, who work for the division at the Broadway One office in Glasgow, is not yet clear.

A spokeswoman for Capita said after the sale to Lloyds: “We will continue to work closely with Tesco to deliver a seamless service for their existing mortgage customers.”

Tesco Bank, which has its main bases in Edinburgh, Glasgow and Newcastle, said it is in discussion with individual employees affected by the transition.

Lloyds beat high street competitors including Santander and Royal Bank of Scotland to secure the portfolio. Mortgage lenders 

have been hit by intense competition in the market, which has seen borrowers benefit from lower rates, but has put pressure on smaller lenders and challenger banks.

Vim Maru, group director of retail at Lloyds Banking Group, said: "This is a good deal for the group, our shareholders and Tesco's mortgage customers."