CHARLOTTE, N.C.--()--Bank of America Corporation announced today that it has agreed to sell its credit card business in Canada to TD Bank Group and that it will exit its credit card businesses in the U.K. and Ireland.
“Our strategy is clear: We have been transforming the company to deliver the franchise to our core customer groups, and building a fortress balance sheet behind that”
“Our strategy is clear: We have been transforming the company to deliver the franchise to our core customer groups, and building a fortress balance sheet behind that,” said Chief Executive Officer Brian Moynihan. “While the credit card remains a fundamental core product for our U.S. customers, an international consumer card business under another brand is not consistent with that strategy.”
The move also continues the transformation of Bank of America’s credit card business, following the sale of the U.K. Business Lending portfolio, the agreement to sell the Spanish card business, and the company’s continued exit from the depository institution affinity credit card business with the recent sales of the Regions and Sovereign credit card portfolios.
Sale of Canadian Card Business
Bank of America and TD Bank Group announced a definitive agreement by which TD Bank Group has agreed to purchase Bank of America’s $8.6 billion Canadian credit card portfolio as well as certain other assets and liabilities.
The transaction is expected to close in the fourth quarter, subject to regulatory approval. The transaction is expected to have a positive impact on the company’s Tier 1 common and tangible common equity and the respective ratios.
The transaction is also expected to result in a modest increase in tangible book value per share, which has grown 12 percent from January 1, 2010 to June 30, 20111.
At June 30, 2011, Bank of America’s tangible common equity ratio was 5.9 percent, up from 5.1 percent at January 1, 20101, and its Tier 1 common equity ratio was 8.2 percent, up from 7.1 percent at January 1, 2010. Over the same period, risk-weighted assets are down from $1.56 trillion to $1.39 trillion, and global excess liquidity sources have nearly doubled from $214 billion to $402 billion.
European Card Business
Bank of America manages one of the largest credit card businesses in Europe, with portfolios in the U.K. and Ireland. Combined, these businesses have $19 billion in credit card loans and more than 4,000 employees.
Spain Card Business
Bank of America signed a definitive agreement on August 3, 2011 to sell the Spain card business to Apollo Capital Management, Inc.
U.K. Business Lending
Bank of America sold its $200 million portfolio of small business card loans to Barclays in April 2011.
1 Tangible book value and tangible common equity are non-GAAP measures. For reconciliation to GAAP, please refer to the company’s second quarter 2011 and fourth quarter 2010 earnings materials.
Bank of America
Bank of America is one of the world's largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 58 million consumer and small business relationships with approximately 5,700 retail banking offices and approximately 17,800 ATMs and award-winning online banking with 30 million active users. Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in more than 40 countries. Bank of America Corporation stock (NYSE: BAC) is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange.
Certain statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to future events, including the sale of the Canadian card business; the expected positive impact of the sale of the Canadian card business to the company’s Tier 1 common and tangible common equity and respective ratios, as well as its expected modest increase to tangible book; and the company’s intention to sell its U.K. and Ireland card business. These statements are not guarantees and involve certain risks, uncertainties and assumptions that are difficult to predict and often are beyond Bank of America’s control. Actual outcomes and results may differ materially from those expressed in, or implied by, the forward-looking statements. You should not place undue reliance on any forward-looking statement and should consider the following uncertainties and risks, as well as the risks and uncertainties more fully discussed under Part 1, Item 1A. “Risk Factors” of Bank of America’s Form 10-K for the year ended December 31, 2010, in Part 2, Item 1A. “Risk Factors” of Bank of America’s Form 10-Q for the period ended June 30, 2011 and in any of Bank of America’s other subsequent Securities and Exchange Commission filings: the satisfaction of the closing conditions for the sale of the Canadian credit card business, including among other things the receipt of necessary regulatory approvals; and the company’s ability to exit the U.K. and Ireland credit card businesses. Forward-looking statements speak only as of the date they are made, and Bank of America undertakes no obligation to update any forward-looking statement to reflect the impact of circumstances or events that arise after the date the forward-looking statement was made.