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MBNA Corporation was a bank holding company and parent company of wholly owned subsidiary MBNA America Bank, N.A., headquartered in Wilmington, Delawaremarker, prior to being acquired by Bank of America in 2005. 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 name MBNA is an initialism that was derived as an abbreviation 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.

Mergers and acquisitions

On June 30, 2005, MBNA announced that it was being acquired by Bank of America for stock and cash totalling more than $35 billion. 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 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, Hertfordshiremarker where Loans.co.uk head office is based (they have a call centre in Preston, Lancashiremarker), reported the deal to founders David Cowham and Steve Hayes being worth £100m. MBNA/Bank of America have 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). On October 20, 2006, Bank of America, National Association (USA), a subsidiary of Bank of America Corporation, merged with and into FIA.It should be noted that in Canada and Europe the MBNA name is retained. MBNA Europe headquarters is in Chester, Englandmarker. MBNA Canada's headquarters are located in Ottawa, Ontariomarker. In 2007, the Canadian division was named one of Canada's Top 100 Employers.This purchase was a reunion of sorts. In 1993, NationsBank 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.

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 Cawley.Its first office was housed in a converted A&P supermarket in Ogletown, Delawaremarker. Until his recent 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 Wilmingtonmarker. This investment was credited with help to revive the downtown real estate market.

Politics

MBNA was one of the prime movers in lobbying for the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which took 11 years and millions of dollars spent on lobbying before the act was finally passed when 15 Democrats (all of whom had received campaign contributions from MBNA, notably Joseph R. Biden, Jr. (D-DE) $147,700) joined with their Republican colleagues to sign it into law.

Controversies

MBNA was one of the companies mentioned on a 2004 Frontline PBS special about unfair business practices by credit card companies. Some industry practices which MBNA possibly engaged in previously 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 which earned it the sobriquet, Misrepresentation Bank of North America. MBNA have been found to be one of the leading implementors of Rate-Jacking or what has also been termed the "Great MBNA Interest Rate Escalator Trick". For further information and links, see Credit Cards.

After the MBNA / Bank of America deal of January 1, 2006, a number of MBNA executives were dismissed from the Bank of America board of directors due to their fears that their unethical practices could result in criminal charges against them under a number of statutes including the Sarbanes-Oxley Act.

As of 2009, complaints to regulators by consumers concerning MBNA's unfair and predatory practices have been made with allegations of fraudulent construction of "valid" credit agreements (in the U.K.), abusive and threatening debt collection practices, and a practice of offering attractive balance transfer deals with rate increases that trap customers into debt they can never hope to repay.

MBNA record all telephone numbers used to contact them and then those numbers to contact their customers, particularly to chase debts, without regard to the privacy of those customers - for example, if a customer uses a neighbors or work telephone to contact MBNA at some time, that number will remain on MBNA's database and is likely to be used for debt chasing purposes. MBNA call centre staff also reveal the reason for calling to whoever answers the call, which may be the customer's boss, neighbor, friends, and family. A great deal of complaints in US and UK consumer forums has revealed this particular violation of privacy is a common activity of MBNA.

U.K. Trading Standards in the Chester area, where MBNA Europe Bank is based, have been contacted by numerous customers of MBNA, warning of the company's behaviour, but the standards agency, responsible for upholding customer complaints, has so far failed to engage in any meaningful communication with those customers despite being in "regular contact" with MBNA for unknown reasons. MBNA Europe Bank is the largest employer in the Chester area.

In Ireland, MBNA calls 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. MBNA has also been criticised for its practice of having two 0% deals on the same credit card of different lengths which can lead to consumers' balances being 'trapped' and accumulating interest.

References

  1. USPages.com > Regional Banks > MBNA Corporation
  2. PBS.com - Frontline: Secret History of the Credit Card
  3. http://www.independent.ie/business/personal-finance/surviving-the-recession/credit-card-debtors-harassed-1920987.html
  4. http://www.credit-card-comparison-online.co.uk/mbna/platinum-plus.asp


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