Wachovia terminates MBNA credit card agreement
04 November 2005 | 12312 views | 0
US bank Wachovia has terminated its card issuing agreement with MBNA following Bank of America's acquisition of the credit card firm.
The news comes as MBNA shareholders approve the company's $35bn takeover by Bank of America.
In a statement Wachovia says it will conclude the five year agreement with MBNA nine months after the proposed Bank of America/MBNA merger.
Ben Jenkins, president of Wachovia's general bank division, says: "We believe it is in the best interests of both companies to undertake an orderly exit from this partnership."
Wachovia says it conducted an in-depth analysis of its credit card business after the announcement of the MBNA acquisition and decided to re-enter the credit card market as a direct issuer in January 2006.
MBNA is required to pay a $100 million termination fee, which Wachovia says will offset its own costs for re-entering the credit card business.
Jenkins says the move back into credit cards "also offers us a great opportunity to gain synergies with our debit and ATM card businesses and ensure we are providing the best service to our customers".
Last month US-based payments processor TSYS said that it could lose a lucrative deal with Bank of America following the bank's acquisition of MBNA.