Bank of America Corp became the No. 1 US credit-card issuer yesterday as it completed its US$34.2 billion acquisition of MBNA Corp.
The second-biggest US bank by assets, Bank of America completed the purchase after receiving approval from shareholders and regulators. The bank said in a statement that MBNA chief executive officer Bruce Hammonds will run Bank of America's card division from MBNA's former headquarters in Wilmington, Delaware.
The purchase vaults Charlotte, North Carolina-based Bank of America past American Express Co and JPMorgan Chase & Co with a combined US$140 billion in outstanding credit-card balances. Bank of America, also the top issuer of US debit cards, will try to sell its products to owners of MBNA accounts and use its affinity marketing programs to retain existing customers.
"The ability to utilize those marketing programs is going to be enormous for Bank of America," said Richard Bove, an analyst for Punk Ziegel & Co in Pinellas Park, Florida. "You'll see a significant increase in the bank's credit-card activity now that they have MBNA."
The US credit-card industry is now the realm of five top companies: Bank of America, American Express, JPMorgan and Citigroup Inc, all based in New York, and McLean, Virginia-based Capital One Financial Corp. Collectively, they control about three-quarters of the US$700 billion in outstanding balances on general-purpose credit cards, based on 2004 figures compiled by the Nilson Report, an industry newsletter.
MBNA holders will receive 0.5009 Bank of America shares plus US$4.125 in cash per share, or US$27.24 based on Dec. 30's US$46.15 closing price for Bank of America stock. MBNA shares closed at US$27.15.
"You have to have scale in this business," Bove said. "By doubling the size of their credit-card business, Bank of America will lower their cost of handling each individual account."
Bank of America said yesterday that it expects to record US$1.3 billion in "restructuring" costs. The bank said when the deal was announced June 30 it would cut US$850 million in annual combined costs by the end of next year, in part by slashing 6,000 jobs.
Bank of America chief executive officer Kenneth Lewis, 58, said last month at a New York conference hosted by Goldman Sachs Group Inc that the bank is "sticking to" its original forecasts for the merger.
The bank expects to lose about 7 percent of MBNA's revenue as rival banks that worked with the issuer take business elsewhere. Wachovia Corp, the No. 4 US bank, said on Nov. 3 that it was ending its joint-marketing agreement with MBNA and will start its own credit-card operation.
EUROPEAN TARGETS: The planned Munich center would support TSMC’s European customers to design high-performance, energy-efficient chips, an executive said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday said that it plans to launch a new research-and-development (R&D) center in Munich, Germany, next quarter to assist customers with chip design. TSMC Europe president Paul de Bot made the announcement during a technology symposium in Amsterdam on Tuesday, the chipmaker said. The new Munich center would be the firm’s first chip designing center in Europe, it said. The chipmaker has set up a major R&D center at its base of operations in Hsinchu and plans to create a new one in the US to provide services for major US customers,
The Ministry of Transportation and Communications yesterday said that it would redesign the written portion of the driver’s license exam to make it more rigorous. “We hope that the exam can assess drivers’ understanding of traffic rules, particularly those who take the driver’s license test for the first time. In the past, drivers only needed to cram a book of test questions to pass the written exam,” Minister of Transportation and Communications Chen Shih-kai (陳世凱) told a news conference at the Taoyuan Motor Vehicle Office. “In the future, they would not be able to pass the test unless they study traffic regulations
GAINING STEAM: The scheme initially failed to gather much attention, with only 188 cards issued in its first year, but gained popularity amid the COVID-19 pandemic Applications for the Employment Gold Card have increased in the past few years, with the card having been issued to a total of 13,191 people from 101 countries since its introduction in 2018, the National Development Council (NDC) said yesterday. Those who have received the card have included celebrities, such as former NBA star Dwight Howard and Australian-South Korean cheerleader Dahye Lee, the NDC said. The four-in-one Employment Gold Card combines a work permit, resident visa, Alien Resident Certificate (ARC) and re-entry permit. It was first introduced in February 2018 through the Act Governing Recruitment and Employment of Foreign Professionals (外國專業人才延攬及雇用法),
‘A SURVIVAL QUESTION’: US officials have been urging the opposition KMT and TPP not to block defense spending, especially the special defense budget, an official said The US plans to ramp up weapons sales to Taiwan to a level exceeding US President Donald Trump’s first term as part of an effort to deter China as it intensifies military pressure on the nation, two US officials said on condition of anonymity. If US arms sales do accelerate, it could ease worries about the extent of Trump’s commitment to Taiwan. It would also add new friction to the tense US-China relationship. The officials said they expect US approvals for weapons sales to Taiwan over the next four years to surpass those in Trump’s first term, with one of them saying