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Bank of America gets out of Credit Cards business (in Canada) | Advantage Dealbook

TD Canada Trust Tower in Toronto

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Bank of America has sold businesses worth $30 billion since the restructuring put Moynihan in charge in 2010. The latest sale of its Canada Credit Card businesses has been bought by the Toronto headquartered TD group which also owns the TD Ameritrade broking businesses, TD Waterhouse, TD Insurance, TD Bank and TD Canada Trust with 2600 ATMs in Canada country

The MBNA business was worth $8.6 bln in outstanding balances and a likely premium of around a $1 bln may be considered , though the bank has not disclosed the profit in the transaction. MBNA’s European business is worth $19 bln and is next up for sale. MBNA Europe has issued card portfolios in Britain and Ireland

The Countrywide acquisition may be the important reason for BofA’s precipitate sales of International and even local assets as it faces $5 bln in fresh settlements with AIG, $20 bln in provisions already made after a first settlement with private investors for faulty mortgage securities from Countrywide’s sub prime portfolio and State Attorney Generals look to a bigger settlement from the big banks

The volume of deals in July has hit an all time high after a precarious low in June with $140 bln in deals in the US alone with nearly a 1000 deals, google also chancing its arm, picking up Motorola’s handsets business from the company split planned since 2010

The MBNA USA business remains with Bank  of America. In the latest financials, the US business had charge offs of 7.3% and the Non US business with assets of $28 bln, had charge off rates of 6.3% It added $4 bln in credit to its cards portfolio in Q2. The charge offs were in double digits as latae as Q2 of last yea, with 14% charge offs in the International portfolio

BofA’s US Credit Card balances at $105 bln equal India’s external debt even after the sale of its international portfolio. Competitor JP Morgan looks to a target of $120 bln in outstanding balances from its global portfolio this year

 

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