Frowns in Wilmington over MBNA's purchase

July 02, 2005|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

WILMINGTON, Del. - MBNA Corp.'s imprint touches so much of this riverside city, some locals joke that the credit-card giant "owns" it.

So, when the world's largest independent credit-card lender announced Thursday that it was being bought by Charlotte, N.C.-based Bank of America Corp. for $35 billion in cash and stock, just about everyone in town was talking about what would become of the company, Wilmington and the "First State," as tourism signs proudly proclaim.

"Delaware is a small place. Everyone knows everyone," said Cynthia Vanarsdall, during happy hour Thursday at the Iron Hill Brewery on Wilmington's riverfront. "When something like this happens, it's a big deal."

MBNA's sprawling campus of seven buildings takes up nearly 12 blocks in the heart of downtown. In nearby Newark, a second cluster of the company's offices is so massive, skywalks help employees get from building to building. With 10,680 employees in Delaware, MBNA is not only the biggest private employer in Wilmington, but the entire state.

The company rehabilitated a section of row homes adjacent to its headquarters. The company donates millions of dollars to philanthropic causes and has employed hundreds of students from nearby universities. It's tough in this town not to find someone who knows someone who works for MBNA.

The company's roots are in Baltimore, where it started as an arm of Maryland National Bank, but the company grew after its move to Delaware with the rise in personal credit and debt. Like other financial institutions, it was lured to Delaware when the state lowered the state income tax that banks must pay and removed the cap on how much interest and fees credit-card companies could charge.

In the early 1980s, MBNA moved into an old A&P grocery near Newark. A year later, it changed its name to Maryland Bank NA and had less than 100 jobs.

Over the next decade, the company would undergo huge growth. Delaware, primarily the city of Wilmington, reaped the benefits. The glass and steel towers of various financial services companies that trace the city's skyline, drawn by the state's limited restrictions, are more imposing than those found in most cities with 75,000 residents.

Led by the creation of the affinity credit card - logo cards issued to members of organizations and colleges - the company's revenues began a steady rise. Its business increased just as the impact of the DuPont Co., the more than 200-year-old chemicals company that had driven Wilmington's economy for years, began to diminish. MBNA surpassed DuPont as the state's largest private employer in 2002.

In 1994, MBNA began moving its headquarters to Wilmington, transforming a desolate section into a thriving corporate center.

Charles M. Cawley, the company's founder and chief executive officer, worked under the premise that the more visible the company, the easier to attract customers. The MBNA name began showing up on everything from billboards overlooking Interstate 95, which bisects the city, to signs at the local baseball stadium and area festivals. The MBNA Foundation poured millions into public schools.

In 2002, the MBNA Foundation donated $20 million to the University of Delaware's school of business. It was renamed the Alfred Lerner College of Business and Economics after the former MBNA chairman and chief executive. MBNA also supported a professorship in the business school and gave money for construction of the MBNA career services center.

"It started to show up everywhere in Delaware," Regina Rash said of the name as she waited at a bus depot across from the company headquarters. "It's definitely everywhere you go."

As workers spilled from the company's headquarters - set up a like town courtyard with a brick street and white pillars fronting gold-plated doors at the main entrance - most were reluctant to talk about the future of their employer.

Timara Moody, who checks addresses on returned mail for the company, said co-workers were anxious throughout the day, checking the Internet for news and constantly browsing an internal question-and-answer page the company set up to explain the deal. Many wondered whether their jobs would be among the 6,000 expected to be lost in a consolidation.

"The company said not to worry yet, that it's early," Moody said. "But, of course, people are worried."

Anthony Chelpaty, 39, who moved to Wilmington nine years ago, said the merger was the topic of conversation among his running group Thursday evening.

"Even if half of the 6,000 jobs are lost in Delaware, that could be a huge impact," Chelpaty said Thursday night. "It's a niche industry. It's not like you can take those skills somewhere else."

Some in Wilmington said they detected signs that the company's fortunes were turning. The company had saturated the credit-card market, and low interest rates affected profits. When Cawley stepped down in 2003 after 22 years, the company began cutting costs after years of exorbitant spending to put up a national name.

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