Bank of America snaps up £19bn MBNA

BANK of America is to take over credit card giant MBNA in a $35bn (£19.4bn) deal that will create a major new force in global banking.

Already America's second-largest bank, the addition of MBNA will take Bank of America into second place in the world credit card league, doubling its number of cardholders to 40m.

There will be some 6,000 job losses, but there are no details on where the axe will fall. MBNA has a sizeable presence in the UK, where it employs 4,000, largely in Chester. It is Britain's second-largest provider of credit cards after Barclaycard.

'Today's announcement is not only about the creation of one of the world's largest card providers. That is compelling in, and of, itself,' said Bank of America chairman and chief executive Kenneth D Lewis. 'But it's really a much larger story about two companies with complementary strengths. The result will be the country's top retailer of financial services with the size and scale to drive distribution and marketing efficiencies.'

He said the deal, likely to be completed by the end of the year, would make the combined entity the fourth-most profitable company in the world. Cost savings of $850m by 2007 are predicted but there will be a one-off restructuring charge of $1.25bn, to include the job losses.

MBNA chief executive and president Bruce L Hammonds will take on the same roles at Bank of America's card services operations.