MBNA Corp.

1100 North King Street

Wilmington, DE 19884-0131
(800) 362-6255
www.mbns.com
 

Sales

$11.7 billion

Business Description 

MBNA Corporation (the “Corporation”), a registered bank holding company, was incorporated under the laws of Maryland on December 6, 1990. It is the parent company of MBNA America Bank, N.A. (the “Bank”), a national bank organized in January 1991 as the successor to a national bank formed in 1982 and the Corporation’s principal subsidiary. The Bank has two wholly owned foreign bank subsidiaries, MBNA Europe Bank Limited (“MBNA Europe”) formed in 1993 with its headquarters in the U.K. and MBNA Canada Bank (“MBNA Canada”) formed in 1997. Through the Bank, the Corporation is the largest independent credit card lender in the world and is the leading issuer of endorsed credit cards, marketed primarily to members of associations and customers of financial institutions and other organizations. In addition to its credit card lending, the Corporation makes other consumer loans, including installment and revolving unsecured loan products, and offers insurance and deposit products. The Corporation is the parent of MBNA America (Delaware), N.A. (“MBNA Delaware”), a national bank that offers mortgage loans, aircraft loans and business loan products.

Products and Services

Credit Cards

The Corporation offers standard, gold, and Platinum Plus personal and business credit cards and customizes them for thousands of endorsed affinity programs and for programs under its own brand name. In addition, the Corporation offers Customers even more customized, high-end credit card products such as the Quantum card. The Corporation’s card programs offer a variety of benefits and features based on the type of endorsing organization and need of the Customer. These benefits and features include competitive interest rates, group-specific enhancements, rewards (including the World Points rewards program), and compensation to the endorsing organization based on the cardholder’s usage. The Corporation’s approach to marketing and underwriting enables it to offer higher initial credit lines to applicants and periodic credit-line increases to existing Customers, resulting in higher usage and average account balances.

The Corporation’s credit cards are currently offered under either the MasterCard or Visa brand name and network. MasterCard and Visa offer the Corporation account generation and transaction volume incentives in order to promote their respective brands. In addition, in connection with the Corporation’s co-branding arrangements, MasterCard and Visa enter into endorsing arrangements with certain of the Corporation’s co-branding partners. See discussion of co-branding under “Marketing” on pages 2 through 4 below. In January 2004, the Corporation entered into an agreement with American Express to offer its credit cards under the American Express brand and network and intends to begin offering American Express branded cards upon satisfaction of certain conditions contained in the agreement.

Other Consumer Loans

The Corporation’s other consumer loan products include unsecured lines of credit accessed by check or electronically with either fixed monthly payments or minimum payments similar to credit card accounts. Customers use these products primarily for large purchases or consolidation of other consumer debt. The Corporation markets these products to its existing credit card Customers and to others. In the U.S., the Corporation also offers sales finance accounts, which are unsecured lines of credit marketed to customers of a

limited number of retailers and service providers and include instant financing offered at retail points of sale. In 2003, the Corporation began placing less emphasis on the marketing of sales finance accounts. Through MBNA Europe, the Corporation also offers fixed term unsecured loan products with fixed monthly payments.

The Corporation offers specialty finance products, including mortgage and aircraft loans, to consumers in the U.S. through MBNA Delaware and unsecured lines of credit to small businesses through the Bank. The Corporation’s mortgage loans primarily consist of home equity loans offered as a debt consolidation tool. The mortgage loans also include purchase money and refinance loans. The Corporation’s mortgage loans are offered primarily to the Corporation’s credit card and other consumer loan Customers. The Corporation originates and then sells the mortgage loans to third parties. The Corporation does not service any mortgage loans.

Deposits

In the U.S., the Corporation offers money market deposit accounts and certificates of deposit through the Bank. Money market deposit accounts provide Customers with liquidity and convenience of service, as well as insurance up to $100,000 per depositor by the Federal Deposit Insurance Corporation (“FDIC”). Certificates of deposit are traditional fixed term investments with maturities that typically range from six to sixty months, and are insured by the FDIC up to $100,000. Deposit products are offered to members of the Corporation’s endorsing associations, to existing credit card Customers and to others.

Business Lending Products

The Corporation offers business lending products in the U.S. (through MBNA Delaware), the U.K., and Canada. The Corporation’s business lending products include general purpose business credit cards marketed primarily to small businesses, and purchasing and corporate cards for small and larger businesses for business, travel and corporate purchasing.

Insurance

The Corporation offers credit protection products to credit card and other consumer loan Customers of the Bank, and markets credit insurance to Customers of MBNA Europe and MBNA Canada. In addition, the Corporation markets credit-related life and disability insurance to Customers whose accounts have been acquired from other lenders. These insurance and credit protection products are marketed only to the Corporation’s loan Customers, and only in conjunction with their loan accounts with the Corporation and not any other loan accounts. A third-party vendor manages aspects of the sale, retention and administration of certain of these products. Customer acceptance of these products generally has been higher in the U.K. than in the U.S. and, as a result, these products have accounted for a higher proportion of U.K. revenue than U.S. revenue.

Insurance Finance

In January 2004, MBNA Europe acquired Premium Credit Limited, an independent premium finance company in the U.K. Premium Credit makes loans to businesses, including professionals and small business owners, to pay premiums on property, general liability, and other types of insurance. Premium Credit also provides loans to retail consumers for financing of premiums on insurance products. Premium Credit generates these loans through its relationships with a network of insurance companies, agents, and brokers. At year-end 2003, Premium Credit had £814 million (approximately $1.5 billion) in outstanding loans.