Bank of America is acquiring MBNA. The acquisition combines the countrys largest domestic bank with one of the largest providers of credit card and payment products. MBNA had become a takeover target in recent months. Profits plunged as consumer dissatisfaction with its rising interest rates, fees and charges drove many cardholders to pay off their accounts and take their business elsewhere.
With the acquisition, Bank of America, the nation's third-largest bank, becomes its largest credit-card issuer, with $143 billion in managed outstanding balances and 40 million active accounts. Bank of America said it will add more than 20 million new customer accounts as well as affinity relationships with more than 5,000 partner organizations and financial institutions.
Bank of America said it expects to eliminate 6,000 jobs from the merged companies.
In May MBNA reported financial results in which actual earnings fell to $31.7 million, or 2 cents a share, far short of its projection of $519.7 million, or 4 cents a share.
Bank of America Chairman and Chief Executive Officer Kenneth D. Lewis said the acquisition will create "the countrys top retailer of financial services with the size and scale to drive distribution and marketing efficiencies."
The deal confirms that the concept of "one-stop shopping" is still alive and well in the financial services industry. Earlier this month, Washington Mutual bought Providian, a large credit-card issuer with a checkered past.
Bruce L. Hammonds, CEO and president of MBNA Corporation, will become CEO and president of Bank of America Card Services and report to Liam E. McGee, president, Bank of America Global Consumer and Small Business Banking. Hammonds will remain in Wilmington, Del., and be part of Bank of Americas Risk & Capital Committee, which guides the companys strategic direction.
Hammonds and other MBNA executives narrowly escaped death when their helicopter crashed in New York City earlier this month.
