Business Case Studies, Mergers, Acquisitions and Takeovers Case Study, Bank of America's Acquisition of MBNA, Growth Challenges in American Credit Card Market

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Mergers, Acquisitions and Takeovers Case Study

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Case Title:

Bank of America's Acquisition of MBNA: Growth Challenges in American Credit Card Market

Publication Year : 2005

Authors: Sujatha, T. Phani Madhav

Industry: Banking, Insurance and Financial Services

Region:USA

Case Code: MAA0038

Teaching Note: Not Available

Structured Assignment: Not Available

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Abstract:
Bank of America announced its decision to acquire MBNA, the largest credit card issuer in the world, in June 2005. This marked the re-entry of Bank of America into the credit card business, which had taken a back seat after the bank spun off its BankAmericard operations in 1968. With the acquisition, Bank of America is expected to become the number one player in the US credit card market with a 20.2% share. Nevertheless, analysts expressed concerns on the deal opining that it would be difficult for Bank of America to make a mark in the already saturated business. Giant companies such as American Express, Citicorp and Capital One are expected to give Bank of America tough competition.

Pedagogical Objectives:

  • To highlight the dynamics of credit card industry in the US
  • To discuss the pros and cons of the Bank of America/MBNA deal.

Keywords : Bank of America; MBNA; Second largest financial firm worldwide; America’s credit card industry; Mastercard and Visa; Consolidation in the banking industry; Bank of America’s acquisition strategy; Growth Strategies Case Study; American Express; Competing in the saturated market; Shift towards consumer lending

Contents : 
Bank of America and America’s Credit Card Industry
Bank of America’s Deal with MBNA
Future Challenges

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