Bank of America to buy MBNA

Northwestern Financial Review, Jul 15-Jul 31, 2005

Bank of America Corporation announced it will buy MBNA Corporation, a leading provider of credit cards. Bank of America will become one of the largest card issuers in the United States, with $143 billion in managed outstanding balances and 40 million active accounts, upon completion of the transaction, which is expected in the fourth quarter.

Bank of America will add more than 20 million new customer accounts as well as affinity relationships with more than 5,000 partner organisations and financial institutions. The transaction is valued at $35 billion or $27.50 per MBNA share. Bank of America expects to achieve overall expense efficiencies of $850 million after-tax, which would be fully realized in 2007, and anticipates a restructuring charge of $1.25 billion after-tax. Cost reductions will come from a range of sources, including the reduction of 6,000 jobs.