MBNA Corporation was a bank holding company and parent company of wholly owned subsidiary MBNA America Bank, N.A., headquartered in Wilmington, Delaware, prior to being acquired by Bank of America in 2006. In December 2016, UK-based Lloyds Banking Group purchased MBNA from Bank of America for £1.9 billion. It was the world's largest independent credit card issuer, specializing in affinity cards. MBNA was founded in 1982 as Maryland Bank, N.A., a subsidiary of Maryland National Bank. The letters N.A. stood for 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 in 1993.
History
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The former Maryland National Bank, once the largest banking chain in Maryland, originated as the Baltimore Trust Company in the early 1900s. It later was challenged by the expenses and problems from the building of its landmark iconic art deco-style skyscraper of red brick, masonry, and limestone trim, headquarters in downtown Baltimore at 10 Light Street between East Redwood (formerly German Street before World War I) and East Baltimore Streets. The new BTC Building which immediately became the tallest building in Baltimore and Maryland, surpassing the neighboring Citizens National Bank to the south, was begun in 1924 and completed in 1929, just before the avalanche of economic disaster, unemployment and the now deepening Great Depression in the early 1930s following the Wall Street Crash of 1929. After a series of reorganizations during the "New Deal" administration of 32nd President Franklin D. Roosevelt and his bank holiday in 1933, shortly after taking office in March, the bank was reorganized as the Maryland National Bank.
By the early 1980s after a dispute with Maryland state banking officials and the legislators of the General Assembly of Maryland over increasing the level of interest allowed on credit card changes from the long-time traditional 18 - 1/2%, a number of Maryland banks including Maryland National moved their credit card issuing and operations centers to the neighboring State of Delaware which had a more "business-friendly" environment and now released from interest rate ceilings were able to greatly increase the amount charges to their Maryland checking, savings accounts and credit card holders. Their Delaware operations were supplemented by banker/financiers generous campaign contributions to various political committees and politicians over decades in the small state). From that point, a number of increasing banking services were run out of Delaware and necessitated the corporate reorganization of many banks and the beginnings of holding companies to control and increasing number of subsidiaries in Maryland and other near-by states.
MBNA was founded in 1982 by a group of MNC Financial (regional bank holding company headquartered in Baltimore, Maryland) executives headed by Charles Cawley. Its first office was housed in a converted old A&P (Great Atlantic & Pacific Tea Company) food supermarket in Ogletown, Delaware. Until his death, Cleveland Browns owner Al Lerner served as Chairman of the Board.
In 1995, MBNA moved its headquarters from a suburban location to Rodney Square in downtown Wilmington, Delaware. This investment was credited with helping to revive Wilmington's downtown real estate market.
Historically, many MBNA executives were former employees of the FBI.
Mergers and acquisitions
On June 30, 2005, MBNA announced that it was being acquired by Bank of America for stock and cash totaling more than $35 billion, reuniting MBNA with Maryland National in a roundabout way, as NationsBank acquired in 1998, the Bank of America, the long-time multi-state large bank which previously focused on the western U.S. and founded in the early 20th century in San Francisco, California, by an Italian merchant. The deal was closed on January 1, 2006. The acquisition resulted in MBNA being renamed to "Bank of America Card Services" while still based in Delaware. For the first part of 2006, MBNA still issued credit cards under its own name associated with Mastercard, VISA, and American Express, but by the second half of 2006, all credit card products were re-branded as Bank of America rather than MBNA.
At the same time in June 2005, MBNA bought Loans.co.uk (LCUK), then the United Kingdom's leading finance broker. Although figures were never released, various media outlets including newspapers in Watford where Loans.co.uk head office is based reported the deal made founders David Cowham and Steve Hayes worth £100m. MBNA/Bank of America had since decided to close Loans.co.uk due to the current market.
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, England. MBNA Canada's headquarters is located in Ottawa. In 2007, the Canadian division was named one of Canada's Top 100 Employers. This purchase was a reunion of sorts. In 1993, NationsBank (formerly NCNB, and originally as North Carolina National Bank, bought MNC Financial (whose credit card division was spun off years earlier to become MBNA) as they had earlier purchased and merged with Baltimore's second-largest bank - The Equitable Trust Company, (later renamed the Equitable Trust Bank, not the bank of similar name in New York City in the 1980s, founded by newspaper chain/syndicate magnate, magazine publisher and later financier Frank Munsey as the Munsey Trust Company in 1913 and reorganized as Equitable two years later. 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 (previously NCNB, originally North Carolina National Bank). 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 would be purchasing MBNA's Canadian MasterCard portfolio. The acquisition of MBNA Canada by TD, which was completed on December 1, 2011, saw 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.
In January 2013 Virgin Money agreed to buy £1 billion of assets from MBNA; these are the Virgin Credit Card assets which MBNA have serviced and managed in partnership with Virgin Money since 2002. The former Vice Chairman of MBNA Corporation, Lance Weaver, became Virgin Money's President of Virgin Money Cards.
On the December 20, 2016, Lloyds Banking Group announced that they would purchase MBNA from Bank of America for £1.9 billion, its first acquisition since the 2008 financial crisis. The deal was completed on June 1, 2017.
Controversies
MBNA hired the son of Vice President Joe Biden during the years when Biden was a Senator and was pushing for bankruptcy reform legislation supported by the company. Because of the close relationship between Biden and MBNA, an article in the conservative political magazine, National Review, referred to Biden as the "Senator from MBNA".
According to the documentary Maxed Out, MBNA was alleged to be the top contributor to George W. Bush's 2000 presidential campaign.
MBNA was one of the companies mentioned on a 2004 Frontline WGBH Boston PBS 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 card.
In Ireland, MBNA was accused of calling consumers up to eight times a day who were 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.
In the UK, MBNA has come under fire for its interpretation of rules under which credit card providers must allocate payments to the debt with the highest interest rate first: one consumer site called MBNA's interpretation of these rules a "disingenuous money-making tactic".
References
External links
- MBNA Limited (UK) Website
- MBNA Canada
- MBNA (Archive)
- Lloyds Banking Group
- Bank of America Official Site
- Yahoo! - MBNA Corporation Company Profile
- PBS video - Secret History of the Credit Card
- Information about MBNA's Corporate Foundation
