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Finance & Accounting
Pages 5 (1255 words)
Bank of America Table of Contents Perspective of the Board of Bank of America 3 Perspective of the shareholders of Bank of America 4 Perspective of the shareholders of MBNA 5 Perspective of the hedge fund 5 Perspective of the US Federal Trade Commission 6 References 8 Perspective of the Board of Bank of America The acquisition of MBNA by the Bank of America reflects the strategic issues in the credit card business for the Board of Bank of America.
MBNA is the largest player in the credit industry worldwide. By acquiring MBNA, the Board of Bank of America would be able o acquire a majority market share of 20.2% in the $1.2 trillion credit card business. For this reason, the Board of America has taken a strategic decision to buy out MBNA for $35 billion. The advantages of the acquisition include access to a large share of the worldwide credit card markets (Kumar, 2012, p.37). The Bank of America could make use of its large network of 5800 branches in the US for providing financial services. The customer portfolio of MBNA also comprises of low risk borrowers which would be advantageous for the bank of America. The buyout also involves certain disadvantages. The buy out decision of MBNA has come at a time when the credit card market is saturated and there is a turn-around in the consumer behavior in the credit cards industry. Thus the growth prospects of venturing into the credit card business are likely to be decided with time. ...
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