BofA to Acquire MBNA for $35 Billion

Bank of America, the second largest U.S. bank, has inked a deal to acquire MBNA for $35 billion, in a deal that creates the nation’s largest bank credit card issuer with nearly $135 billion in U.S. outstandings. The merger, expected to close in the fourth quarter, will further consolidate the market power of the top ten issuers producing a market share of about 87%. About 6,000 jobs will be cut as a result of the combination producing an estimated $850 million in cost reductions. Bruce Hammonds, CEO and president of MBNA, will become CEO and president of BofA Card Services and report to Liam McGee, president, BofA’s Global Consumer and Small Business Banking unit. Hammonds will also be part of BofA’s Risk & Capital Committee. Frank Bramble, vice chairman of MBNA, will be appointed to the BofA Board of Directors. MBNA posted net income of $514.1 million in 1Q/05, excluding charges for staff reductions, facilities closings, and contract terminations. The issuer has been struggling with declining credit card balances and a weak diversification effort in the USA.

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TNS Certifies Semtek’s Mobile Swipe Reader

Semtek’s “Mobile Swipe” magnetic card reader line of Nextel cellular phones has been certified on the Synapse Payment Gateway operated by Transaction Network Services. The combination provides mobile merchants with the ability to wirelessly authorize credit card payments. TNS’ Synapse Payment Gateway provides transaction connectivity to the major banks and third party payment processors in the US and has over 42,000 payment terminals currently in service. Semtek Innovative Solutions Corporation is a developer and manufacturer of magnetic stripe card readers and software applications for mobile commerce transactions. Transaction Network Services provides data communications services for transaction-oriented applications.

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MAY CARD DEBT

Credit card outstandings finally rebounded to GBP 55.7 billion during May, but remain up a mere 3% over one year ago. In April, seasonally adjusted credit card loans actually dipped for the first time since May 1994. Total net lending to consumers for May was GBP 188.5 billion. The Bank of England says the increase in total net lending to individuals in May (GBP 9.8 billion) was stronger than in April and the previous six month average. Within the total, the increase in net lending secured on
dwellings (GBP 8.0 billion) was stronger than the increase in April and
the previous six month average, but the twelve-month growth rate fell to
11.1% from 11.4% in April. The increase in consumer credit (GBP 1.8
billion) was stronger than Aprilâ™s weak turn out. Within this, net credit card lending was stronger than in April and the previous six month average, while net other loans were stronger than in April but weaker than the previous six month average. The Monetary Policy Committee of the Bank of England decided June 22nd to maintain its benchmark interest
rate at 4.75%.

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Smart Card Group Forms a Healthcare Counci

The Smart Card Alliance has formed a Healthcare Council to bring payers, providers and technologists together to promote the adoption of smart cards in U.S. healthcare organizations. The Council will also seek partnerships with HL7 and other organizations whose mission it is to achieve common standards for electronic medical records. The Healthcare Council is one of several Smart Card Alliance Technology and Industry Councils, a new type of focused group within the overall structure of the Alliance. The Smart Card Alliance is a not-for-profit, multi-industry association working to stimulate the understanding, adoption, use and widespread application of smart card technology.

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Credit Card Portfolio Yields Wane in May

Yields on credit card-backed bonds fell for the third consecutive month as the gap between credit card interest rates and costs continues to narrow. During May, the yield declined to 16.90%, 37 basis points lower than the prior month and 81 basis points below the high set in March. However, yields remain remarkably above year-ago levels by 69 basis points. During May, charge-offs were higher, while delinquency and monthly payment rates declined, according to FitchRatings.

YIELD HISTORICAL
May 04: 16.21%
Jun 04: 16.77%
Jul 04: 16.72%
Aug 04: 16.37%
Sep 04: 17.50%
Oct 04: 16.39%
Nov 04: 17.15%
Dec 04: 16.81%
Jan 05: 16.64%
Feb 05: 16.27%
Mar 05: 17.71%
Apr 05: 17.27%
May 05: 16.90%
Source: FitchRatings

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AmEx Middle East Launches a Gold Credit Car

American Express Middle East has introduced a “Gold Credit Card.” AmEx is now looking for local bank partnerships to expand the new smart card product offering. The card carries an annual membership fee of QR300. It offers “Membership Rewards,” “Retail Protection Insurance,” and access to airport lounges. American Express cards are accepted by more than 1,000 merchants in Qatar.

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AmbironTrustWave Offers a Vital PCI Solution

Chicago-based AmbironTrustWave is now offering PCI compliance validation services to value-added developers of Vital Processing Services. This will provide compliance with the PCI and Visa Payment Application Best Practice standard. AmbironTrustWave’s TrustedApp service measures compliance with PABP requirements through a detailed review of application operating files, logs and databases. AmbironTrustWave provides information security and compliance management solutions to Fortune 2000 businesses and the public sector. Vital Processing Services provides technology-based, commerce-enabling services.

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UATP Signs a New Regional Sales Manager

UATP has hired Marguerite Lennon from Continental Airlines as a new Regional Sales Manager. Lennon will focus on the recruitment of new airline issuers and merchants in North America and the Asia-Pacific region. Lennon was a Senior Sales Director at Continental and brings more than 20 years of airline industry experience including Trans World Airlines. UATP accounts are accepted as a form of payment for corporate business travel by more than 200 airlines worldwide.

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Hannspree Selects NCR RealPOS and Retail Pro

Hannspree has selected NCR “RealPOS” technology and “Retail Pro”
software from Island Pacific to automate the POS as the company makes
its debut in the U.S. consumer electronics market. The Company
specializes in the manufacture of liquid-crystal display products for
televisions as well as desktop, notebook and tablet personal computer
screens. The sale includes NCR “RealPOS 70” terminals, NCR “RealPOS”
printers and NCR “RealScan 37” hand-held bar-code scanners. Duncan &
Associates is responsible for the sale while Big Hairy Dog Information
Systems is providing the “Retail Pro” POS software.

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KEB to Launch an Unsecured Foreigners-Only-Card

Korea Exchange Bank is set to launch a new foreigners-only-card
next week. The credit card does not require the usual security deposit
for foreign cardholders. The collateral deposits can run above
US$10,000. The new KEB card will be based only on income as long as the
cardholder is employed by a major firm. KEB says it also plans to
establish a English call center to support the program.

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