MBNA
Encyclopedia
Holding company
A holding company is a company or firm that owns other companies' outstanding stock. It usually refers to a company which does not produce goods or services itself; rather, its purpose is to own shares of other companies. Holding companies allow the reduction of risk for the owners and can allow...
and parent company of wholly owned subsidiary MBNA America Bank, N.A., headquartered in Wilmington, Delaware
Wilmington, Delaware
Wilmington is the largest city in the state of Delaware, United States, and is located at the confluence of the Christina River and Brandywine Creek, near where the Christina flows into the Delaware River. It is the county seat of New Castle County and one of the major cities in the Delaware Valley...
, prior to being acquired by Bank of America
Bank of America
Bank of America Corporation, an American multinational banking and financial services corporation, is the second largest bank holding company in the United States by assets, and the fourth largest bank in the U.S. by market capitalization. The bank is headquartered in Charlotte, North Carolina...
in 2006. It was the world's largest independent credit card
Credit card
A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services...
issuer, specializing in affinity cards
Affinity credit card scheme
An affinity credit card program allows an organization to offer its members and supporters—those who have an "affinity" for that organization—a credit card that promotes the organization's brand and imagery each time a cardholder uses the card...
.
MBNA was founded in 1982 as Maryland Bank, N.A., a subsidiary of Maryland National Bank. The name MBNA is an initialism that was derived as an abbreviation
Abbreviation
An abbreviation is a shortened form of a word or phrase. Usually, but not always, it consists of a letter or group of letters taken from the word or phrase...
or acronym of Maryland Bank, National Association. In 1989, Maryland Bank was renamed MBNA America Bank. MBNA Corp. spun off from Maryland National and became an independent company in 1991. Maryland National was acquired by NationsBank
NationsBank
NationsBank was one of the largest banking corporations in the United States, based in Charlotte, North Carolina. In 1998, it acquired BankAmerica to become Bank of America.-Corporate history:...
in 1993.
Mergers and acquisitions
On June 30, 2005, MBNA announced that it was being acquired by Bank of AmericaBank of America
Bank of America Corporation, an American multinational banking and financial services corporation, is the second largest bank holding company in the United States by assets, and the fourth largest bank in the U.S. by market capitalization. The bank is headquartered in Charlotte, North Carolina...
for stock and cash totalling more than $35 billion, reuniting MBNA with Maryland National in a roundabout way, as NationsBank was purchased by Bank of America in 1998. The deal was closed on January 1, 2006. The acquisition resulted in MBNA being re-named to Bank of America Card Services while still based in Delaware. For the first part of 2006, MBNA (http://www.mbna.co.uk) still issued credit cards under its own name associated with Mastercard, VISA, and American Express, but by the second half of 2006, all card products were re-branded as Bank of America.
At the same time in June 2005, MBNA bought Loans.co.uk (LCUK), then the UK's leading finance broker. Although figures were never released, various media outlets including newspapers in Watford
Watford
Watford is a town and borough in Hertfordshire, England, situated northwest of central London and within the bounds of the M25 motorway. The borough is separated from Greater London to the south by the urbanised parish of Watford Rural in the Three Rivers District.Watford was created as an urban...
where Loans.co.uk head office is based reported the deal made founders David Cowham and Steve Hayes
Steve Hayes
Steve Hayes is an English businessman, and the current owner of both League One football club Wycombe Wanderers and Aviva Premiership rugby union side London Wasps....
worth £100m. MBNA/Bank of America have since decided to close Loans.co.uk due to the current market.
In 2002, MBNA purchased the credit card accounts of Working Assets of San Francisco, California When asked about this, Working Assets' employees have made differing claims. In one letter, it was stated that Working Assets chose MBNA regardless of its political views and entirely for its experience and quality customer service. In another letter, president Michael Kieschnick stated that Working Assets ended up under MBNA when the company purchased the credit card business of Fleet Bank, which had previously issued the card. Kieschnick said it was not Working Assets' choice to select MBNA and cannot change banks without violating its current contract.
On January 1, 2006, MBNA merged with and into Bank of America. MBNA America Bank, National Association, (MBNA) then became a wholly owned subsidiary of Bank of America. On June 10, 2006, MBNA changed its name to FIA Card Services, National Association (FIA), which is not an acronym. On October 20, 2006, Bank of America, National Association (USA), a subsidiary of Bank of America Corporation, merged with and into FIA.
In Canada and Europe the MBNA name is retained. MBNA Europe headquarters is in Chester
Chester
Chester is a city in Cheshire, England. Lying on the River Dee, close to the border with Wales, it is home to 77,040 inhabitants, and is the largest and most populous settlement of the wider unitary authority area of Cheshire West and Chester, which had a population of 328,100 according to the...
, England. MBNA Canada's headquarters are located in Ottawa
Ottawa
Ottawa is the capital of Canada, the second largest city in the Province of Ontario, and the fourth largest city in the country. The city is located on the south bank of the Ottawa River in the eastern portion of Southern Ontario...
. In 2007, the Canadian division was named one of Canada's Top 100 Employers
Canada's Top 100 Employers
Canada's Top 100 Employers is an annual competition that recognizes the best places in Canada to work. First held in 1999, the project aims to single out the employers that lead their industries in offering exceptional working conditions and progressive human resources policies. Winners are...
.
This purchase was a reunion of sorts. In 1993, NationsBank
NationsBank
NationsBank was one of the largest banking corporations in the United States, based in Charlotte, North Carolina. In 1998, it acquired BankAmerica to become Bank of America.-Corporate history:...
bought MNC Financial (whose credit card division was spun off years earlier to become MBNA). Five years later, the Bank of America that exists today was the result of the merger between the San Francisco-based Bank of America and the Charlotte-based NationsBank. In 2005, with Bank of America buying MBNA, it is in effect reuniting MNC Financial's credit card portfolio to its original banking assets and combining the Bank of America credit card portfolio with MBNA's.
Employing more than 25,800 people around the world at the time of the merger with Bank of America, MBNA owned or managed more than $122.5 billion in outstanding consumer credit loans. Most of this loan debt was held in securitized portfolios that had been sold to other entities such as insurance companies and pension funds. MBNA virtually invented the process for securitizing credit card debt and this process contributed significantly to the fast growth of the company. It allowed for increasing the amount loaned without having to acquire matching assets to offset the loans.
On August 15, 2011, MBNA announced that the Toronto-Dominion Bank (TD Canada Trust) would be purchasing MBNA's MasterCard portfolio. The acquisition of MBNA by TD, which is scheduled to be completed sometime between November 2011 and January 2012, will see TD become a dual credit issuer (both Visa and MasterCard), become Canada's largest MasterCard issuer, and one of Canada's largest credit issuing banks. When the merge is complete, current MBNA Canada Bank credit card holders can expect their accounts to remain essentially identical to what they are currently. MBNA MasterCards will not be converted to TD Visas, and rewards programs such as MBNA WorldPoints are planned to be continued. Though MBNA Canada Bank is not in any financial trouble, FIA Card Services (owned by Bank of America Corporation) is gradually scaling back its international credit operations, with eventual plans of a total removal from international credit management.
MBNA history
MBNA was founded in 1982 by a group of MNC Financial (regional bank holding company headquartered in Baltimore, Maryland) executives headed by Charles CawleyCharles Cawley
Charles M. Cawley is a businessman and founding member of the bank MBNA. MBNA was acquired by Bank of America in 2006. A graduate of Georgetown University, he created the bank in 1982.-Local Support in Maine:...
.
Its first office was housed in a converted A&P
The Great Atlantic & Pacific Tea Company
The Great Atlantic & Pacific Tea Company, better known as A&P, is a supermarket and liquor store chain in the United States. Its supermarkets, which are under six different banners, are found in Connecticut, Delaware, Maryland, New Jersey, New York, and Pennsylvania. A&P's liquor stores, known as...
supermarket in Ogletown, Delaware
Ogletown, Delaware
Ogletown is an unincorporated community in New Castle County, Delaware, United States. Ogletown is located at the junction of Delaware Route 4 and Delaware Route 273 east of Newark....
. Until his death, Cleveland Browns
Cleveland Browns
The Cleveland Browns are a professional football team based in Cleveland, Ohio. They are currently members of the North Division of the American Football Conference in the National Football League...
owner Al Lerner
Al Lerner
Alfred "Al" Lerner was an American businessman and philanthropist. He was best known as the Chairman of the Board of credit card giant MBNA and the owner of the Cleveland Browns of the National Football League...
served as Chairman of the Board.
In 1995, MBNA moved its headquarters from a suburban location to Rodney Square
Rodney Square
Rodney Square is the public square in downtown Wilmington, Delaware named after American Revolutionary leader Caesar Rodney. A large statue of Rodney by James E. Kelly stands in the front of the square. The square was created in the early 20th century by John Jacob Raskob who worked for Pierre S....
in downtown Wilmington, Delaware
Wilmington, Delaware
Wilmington is the largest city in the state of Delaware, United States, and is located at the confluence of the Christina River and Brandywine Creek, near where the Christina flows into the Delaware River. It is the county seat of New Castle County and one of the major cities in the Delaware Valley...
. This investment was credited with help to revive Wilmington's downtown real estate market.
Controversies
MBNA was the top contributor to George W. BushGeorge W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....
's 2000 Presidential Campaign.
MBNA was one of the companies mentioned on a 2004 Frontline WGBH Boston PBS
Public Broadcasting Service
The Public Broadcasting Service is an American non-profit public broadcasting television network with 354 member TV stations in the United States which hold collective ownership. Its headquarters is in Arlington, Virginia....
special about unfair business practices by credit card companies. Some practices that Frontline claimed MBNA has engaged in included doubling or tripling of interest rates, shifting billing due dates/payment cycles monthly, and raising rates for customers whose payments were a day or two late. MBNA has been found to be one of the leading implementors of Rate-Jacking. For further information and links, see Credit Cards.
In Ireland, MBNA was accused of calling consumers up to eight times a day who are behind in making payments, which prompted the state debt advisory service to publicly state that harassment is outlawed. Affected people were advised to complain to the relevant authorities. The company in December 2009 admitted overcharging 500,000 Irish consumers up to €18 million. ($24,101,096.0643)
In the UK, MBNA has come under fire for its interpretation of rules under which credit card providers must allocate payments from the highest balance to the lowest, one consumer site called MBNA's interpretation of these rules a "disingenuous money-making tactic".