MNC's star credit-card unit put up for sale to relieve debt

October 26, 1990|By Peter H. Frank

It started eight years ago in an abandoned A&P supermarket at a shopping center in Christiana, Del.

MNC Financial Inc., then called Maryland National Corp., moved its credit-card division to Delaware to escape the 12-percent usury ceiling in Maryland. With a few hundred employees and a portfolio built on credit cards issued mostly to Marylanders, MNC's most profitable division was born.

Originally called Maryland Bank N.A., today's MBNA America has become the fourth-largest and perhaps most-respected credit-card operation in the country.

Yesterday, MNC said it was for sale. The parent company, the owner of Maryland National Bank and American Security Bank, said it needed the money to shore up the financial health of its banks.

MBNA has one of the lowest delinquency levels in the business, less than half the national average.

The division is the largest issuer of Gold MasterCards, second-largest issuer of regular MasterCards and fifth-largest issuer of Visa cards. It has about 10 million cards outstanding and $6.8 billion in total credit-card receivables. MBNA also is the undisputed leader in the market for affinity cards with 1,300 organizations using its card.

The planned sale shocked analysts who have long regarded the division as a constant, shining star for beleaguered MNC. MBNA had been racking up income of about $160 million a year before taxes, providing the parent company with one-third of its earnings last year.

[Analysts predicted that the sale would be an opportunity for American Telephone and Telegraph Co. and General Electric to dramatically increase their activity in a business dominated by banks, the New York Times reported.

[Speculation abounded yesterday over likely buyers, but the banks and other enterprises expected to bid were not willing to comment.

[According to Spencer Nilson, publisher of The Nilson Report, a newsletter in Santa Monica, Calif., that covers the industry, General Motors and Ford Motor Co. are possible buyers, in addition to AT&T and GE.

[Among banking companies, Mr. Nilson said BankAmerica Corp., San Francisco, and NCNB Corp. of Charlotte, N.C., seemed to have both a wish to expand their card businesses and the financial strength to handle the huge purchase. Other buyers might include Citicorp, Chase Manhattan Corp. and First Chicago Corp., he said.]

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