Bank of America has formally taken over MBNA Corporation, sealing a mammoth 34-billion-dollar banking acquisition and creating the largest credit card issuer in the United States measured by balances.
The Charlotte, North Carolina-based Bank of America said as a result of the take-over, which took effect Sunday, that it now has 40 million active credit card accounts on its books and nearly 140 billion dollars in managed balances.
"Today (Sunday) marks the start of an exciting new era for Bank of America in credit cards," Kenneth Lewis, Bank of America chairman and chief executive officer, said in a statement.
"The combination of Bank of America's distribution platform and customer base with MBNA's products, affinity relationships and marketing expertise creates significant opportunities for our combined company," Lewis predicted.
MBNA is the US leader in so-called "affinity relationships" through its branding relationships with organisations such as the National Football League, retailer L.L. Bean, the National Education Association and others groups.
Bank of America said it anticipates a restructuring charge of 1.3 billion dollars after-tax from the giant banking tie-up, but that it expects to achieve overall expense efficiencies of 850 million dollars after-tax to be fully realised by the end of 2007.
Under the deal's terms, shareholders of the Wilmington, Delaware-based MBNA will receive 0.5009 common shares of Bank of America in addition to 4.125 dollars in cash for each of their MBNA shares.
Bank of America's new banking card services unit will be led by Bruce Hammonds, who was MBNA's chief executive officer.
Cost reductions stemming from the acqusition will come from "personnel reductions", technology synergies and lower marketing costs, Bank of America said.
US media reports suggest some 6,000 layoffs could result from the deal. Both companies have significant international footprints, including operations in Europe and China.
The deal caps an aggressive expansion move by Bank of America which recently agreed to buy a nine percent stake in China Construction Bank for three billion dollars and completed a 47-billion-dollar take-over of FleetBoston in 2004.
The take-over was approved by the Federal Reserve on December 15 after Bank of America announced the deal on June 30.