Post by Moses on Jan 2, 2006 21:20:19 GMT -5
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MBNA deal clears path for job cuts
Analysts say Bank of America likely to move fast on layoffs[/b]
By TED GRIFFITH
The News Journal
01/02/2006
Bank of America completed its $35 billion buyout of MBNA Corp. on Sunday, clearing the way for 6,000 job cuts nationally.
The buyout of Delaware's largest private employer closed quietly and right on schedule. There was no signing ceremony or meeting -- Bank of America officials had filed documents with federal securities regulators earlier in the week that made the buyout effective automatically as of Jan. 1, said bank spokesman Terry H. Francisco.
Charlotte, N.C.-based Bank of America had won the necessary regulatory approvals earlier, including clearance from Delaware Bank Commissioner Robert A. Glen, to complete the acquisition of Wilmington-based MBNA, the third-largest U.S. credit card bank.
Bank of America would not provide any details Sunday on how many jobs will be cut in Delaware, where MBNA employs about 10,500 statewide and Bank of America employs about 1,300 in credit card call centers in Christiana and Dover. Since announcing the buyout plan on June 30, bank officials have been tight-lipped on how employment in Delaware will be affected. In combining its credit card operations with MBNA's, Bank of America has said it will cut 6,000 jobs nationally. Analysts have said Delaware could lose 3,000 or more jobs.
Bank officials also haven't given a timetable on when job cuts or office closings will be disclosed, saying only that "when final decisions" are reached, employees and "public officials" will be notified. Analysts who track Bank of America say the bank is likely to move quickly in implementing job reductions and office closures.
Layoffs are painful for a work force to go through, but they are especially demoralizing if they are dragged out over a long period, said Richard X. Bove, an analyst in the Pinellas Park, Fla., office of Punk Ziegel & Co. Bank of America is sure to want to get the cuts done as rapidly as possible without disrupting operations, he said.
The bank also is going to want to quickly achieve the cost savings it has promised Wall Street, the analyst said. Bank of America has said it aims to save about $850 million by the end of 2007 through the elimination of jobs and other areas of overlap between the two credit card operations. Bove said he expects the job cuts and office closures would be largely complete within two months.
There were no last-minute changes to the management structure of the combined credit card operations. Bank of America reiterated Sunday that Bruce L. Hammonds, who had been MBNA's chief executive, will be the head of Bank of America's credit card unit, which will be based in Wilmington. With the addition of MBNA's portfolio, Bank of America becomes the largest credit card issuer in the country. Bank of America now has about about 118 million cards in circulation and about $140 billion in cardholder balances.
"Today marks the start of an exciting new era for Bank of America in credit cards," Kenneth D. Lewis, Bank of America's 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."
Bank of America's share of the U.S. credit card market jumps from 8.6 percent to 20.3 percent, according to statistics from the Nilson Report, a credit card industry newsletter. That market share puts it slightly ahead of the previous No. 1 issuer, JPMorgan Chase & Co., another megabank with its credit card unit based in Wilmington. Chase's market share is 19.1 percent.
Among others leading Bank of America Card Services are three longtime MBNA executives: John R. Cochran, Ric Struthers and Lance Weaver. Hammonds, Cochran and Struthers were part of the team that started MBNA in 1982. Weaver joined in 1991. Henry Fulton, who's been with Bank of America since 1995, will also be a top executive in the combined credit card business. Frank Bramble Sr., a former vice chairman of MBNA, will join Bank of America's board of directors.
Bank of America also reiterated on Sunday that MBNA's annual giving of $60 million nationwide would be added to Bank of America's charitable donations, pushing the total contribution to more than $200 million annually. Bank officials haven't detailed how much will be given in Delaware, where MBNA has long been a top corporate donor.
Bank of America is the nation's second-largest bank by assets, with more than $1 trillion. It has the most branches of any bank in the United States -- 5,800 in 29 states. It has no branches in Delaware, but bank officials have said they are considering establishing branches here.
Contact Ted Griffith at 324-2880 or tgriffith@delawareonline.com.
Bank of America chief Kenneth D. Lewis said the MBNA buyout "marks the start of an exciting new era."
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