In buying MBNA at the end of June, Bank of America pulled off a headline-grabbing deal. At $35 billion in stock and cash, it's the second-largest financial services deal since JPMorgan Chase bought Bank One last year and the second-largest deal overall this year after Procter &Gamble's purchase of Gillette. It was brokered largely by BoA chairman and CEO Kenneth Lewis, who in a matter of days stole one of the most prized monoline credit card companies from under the noses of such rival banks as Wachovia.
With this acquisition Bank of America builds its share of the US credit card business to 23.1%, leaving rivals JPMorgan and Citigroup trailing in its wake, so its executives ought to have every reason to feel smug.
Or should they? It's all very well for Lewis to say that the bank can now not only obtain unrivalled reach in the cards business but can also cross-sell its other products to MBNA's customer base and create "the country's top retailer of financial services, with the size and scale to drive marketing efficiencies". BoA shareholders initially didn't seem so keen, and the share price slumped by 2.8%