Bank of America's acquisition of MBNA Corp. spells big changes for the credit card company but it is expected to have no immediate impact on the companies' European operations, as sources say that at the moment it's business as usual for MBNA Europe.

"Following discussions with MBNA EBL and considering that BofA [has] a minimal presence in the U.K. credit card market, we expect it to be business as usual at MBNA EBL for the time being," said Janet Oram, an analyst at Fitch Ratings. "In the future there may be a change in the servicing process but at the moment there has been no indication that this will happen."

The rating agency said that there was unlikely to be any impact on the ratings of MBNA's outstanding series notes following news of the acquisition, partly because the underlying collateral supporting the transaction is performing well.

"These deals are designed to stand alone, the credit rating of the parent company becomes more important only if the deal is not performing," said one market source. "BofA is a big bank and arguably slightly more credit positive than MBNA, so ultimately a better originator."

Analysts from The Royal Bank of Scotland reported that spreads on the MBNA's Chester Asset Receivables Dealings trust and related European credit card-backed transactions tightened. The combined entity becomes one of the world's largest credit card issuers - MBNA ranked in the top three with 13% market share in Ireland in 2003 and BofA ranked as number two in Italy with 17.5% share. In the U.K. market, MBNA ranked sixth with 8.4% share and BofA had a negligible presence, added RBS analysts. "With a bank issuer behind the card issuer, spreads should tighten toward that of Barclays' BCARD and RBS's Arran programs, though [it is] tough to compare as they have sold only U.S. dollar tranches, whereas MBNA's U.K. operation issued sterling and euro denominated paper," said analysts at RBS.

"I imagine that they will spend some considering whether they want to re-brand or stay MBNA; the only thing that we have done at this stage is add the language to documents that the parent has been bought by BofA," said one source familiar with the transactions.

(c) 2005 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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