Wachovia terminates MBNA credit card agreement

Wachovia terminates MBNA credit card agreement

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.

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