Each depositor insured to at least $250,000 per insured bank



Home > Regulation & Examinations > Bank Examinations > FDIC Enforcement Decisions and Orders




FDIC Enforcement Decisions and Orders

ED&O Home | Search Form | Text Search | ED&O Help


{{5-31-02 p.C-754}}

   [10,164A] In the Matter of MBNA America, National Association, Newark, Delaware, Docket No. 91-12kk (1-14-91).

   FDIC issues order conditionally granting approval for waiver of cross-guaranty.

   [.1][.3] Holding Company—Stock Restrictions—Condition of Cross-Guaranty Waiver

   [.2] Holding Company—Assets—Establishment of Asset Pool Required

   [.4] Holding Company—Payment Required

   [.5] Effective Date of Order—Delayed Until Public Offering of Stock

   [.6] Cross-Guaranty—Waiver—Revocation for Non-Compliance

In the Matter of
MBNA AMERICA, NATIONAL ASSOCIATION
NEWARK, DELAWARE
(which will be an Insured Depository Institution)
related to
MBNA AMERICA BANK, NATIONAL ASSOCIATION
NEWARK, DELAWARE
and
MBNA (DOVER) BANK
DOVER, DELAWARE
and
MARYLAND NATIONAL BANK
BALTIMORE, MARYLAND
and
AMERICAN SECURITY BANK, NATIONAL ASSOCIATION
WASHINGTON, DISTRICT OF COLUMBIA
(Commonly Controlled Insured Depository Institutions)
ORDER CONDITIONALLY GRANTING APPROVAL FOR WAIVER OF CROSS-GUARANTY

FDIC-91-12kk

   WHEREAS, MNC Financial, Inc. (alternatively "Holding Company" or "Applicant") has proposed to establish a holding company which will be called MBNA Corporation ("New Co.") and which will own an insured depository institution to be called MBNA America, National Association, Newark, Delaware ("New MBNA") which will conduct the credit card business presently conducted by MBNA America Bank, National Association, Newark, Delaware ("Old MBNA"), MBNA (Dover) Bank, Dover, Delaware ("Dover"), and certain other subsidiaries of the Holding Company; and

   WHEREAS, New MBNA, when created, will be a "commonly controlled depository institution," within the meaning of section 5(e)(9) of the Federal Deposit Insurance Act ("Act") 12 U.S.C. § 1815 (e)(9), with Old MBNA; Dover; Maryland - National Bank, Baltimore, Maryland ("Maryland National"); and American Security Bank, National Association, Washington, District of Columbia ("American Security") (collectively "Existing Banks") which are all insured depository institutions commonly controlled by the Holding Company; and

   WHEREAS, in order to satisfy indebtedness of the Holding Company in the form of variable rate renewable debt in the amount of $271,000,000 (two hundred seventy one million dollars) due and payable on or about January 15, 1991, the Holding Company borrowed said amount from Maryland National and/or American Security, conditionally approved by the Board of Governors of the Federal Reserve System ("Federal Reserve"), and subject to certain requirements imposed by the Federal Reserve; and

   WHEREAS, in part, as consideration for the extension of credit described above, the Holding Company assigned to Maryland National and/or American Security participations in the proceeds of certain assets held by, through, or for the benefit of the Holding Company. Additionally, the Holding Company pledged to Maryland National and/or American Security all stock which it held in Old MBNA and Dover.

   WHEREAS, in order to effectuate a public offering of common stock of New Co. for the purpose of satisfying Holding Company debt, including the indebtedness described in the preceding paragraph, the Holding Company has made application to the Federal Deposit Insurance Corporation ("FDIC"), pursuant to the provisions of section 5(e)(5)(A) of the Act, 12 U.S.C. §1815(e)(5)(A), for an exemption from liability as to New MBNA for any losses the FDIC suffers or reasonably anticipates to suffer from, or as a result of assistance to, the Existing Banks.

   NOW THEREFORE, BE ADVISED that the Board of Directors ("Board") of the FDIC, having fully considered the facts and information relating to the application for exemption filed by the Holding Company, hereby approves the application for exemption as to New MBNA, subject to the conditions and restrictions set forth below, and issues this ORDER CONDITIONALLY GRANTING APPROVAL FOR WAIVER OF CROSS-GUARANTY ("ORDER").

   [.1]1. This ORDER is conditioned upon the stock in Old MBNA and Dover pledged by the Holding Company to Maryland National and/or American Security not being released by Maryland National and/or American Security to the Holding Company unless the Holding Company shall simultaneously pay to Maryland National and/or American Security $338,655,800 (three hundred thirty-eight million, six hundred fifty-five thousand, eight hundred dollars) from the proceeds of the sale of New Co. Said payment shall be apportioned between Maryland National and American Security in amounts to be determined by the Office of the Comptroller of the Currency ("OCC").

   [.2]2. Additionally, this ORDER is conditioned upon the immediate establishment by the Holding Company of a pool of assets with a book value of $600,000,000 (six hundred million dollars), the kind and quality of which have been previously identified and deemed acceptable to the FDIC, the Federal Reserve, and the OCC, for the purposes of providing consideration for the release of the participations made by the Holding Company to Maryland National and American Security as described above, and making a capital contribution to Maryland National and American Security in the amount of $450,000,000 (four hundred fifty million dollars), with an interest in the $150,000,000 (one hundred fifty million dollars) in remaining assets granted to Maryland National and/or American Security, to serve as a pool of assets from which Maryland National and/or American Security may substitute assets, all as set out in the Transfer Agreement between the Holding Company and Maryland National ("Transfer Agreement"), a copy of which is attached hereto and made a part hereof. Failure to establish said pool will render this ORDER null and void.

   [.3]3. In addition to the transactions described above, Maryland National has represented that it will merge into Old MBNA, subject to application and prior approval by the OCC. Should this merger be approved by the OCC and occur, assets of Old MBNA which are comprised of approximately $42,000,000 (forty two million dollars) in highly leveraged transaction loans and $8,000,000 (eight million dollars) in construction loans, and subordinated debt capital of $35,000,000 (thirty five million dollars), and common equity of $15,000,000 (fifteen million dollars), shall inure to Maryland National as a result of the merger. In order to provide assurances to the FDIC that these items will inure to Maryland National should the merger described in this paragraph be accomplished and to provide security to Maryland National, this ORDER is also conditioned on the Holding Company repledging all its stock in Old MBNA to Maryland National immediately upon its return from Maryland National as contemplated in paragraph 1 above.

   [.4]4. Simultaneously with the closing of the public offering of New Co., the Holding Company agrees to immediately pay to Maryland National and American Security $338,655,800 (three hundred thirty-eight million, six hundred fifty-five thousand, eight hundred dollars) first to repay the extension of credit by Maryland National and American Security above plus interest due, and the remainder as a capital contribution or purchase of stock to be apportioned to Maryland National and American Security in a manner to be determined by the OCC.

   [.5]5. The effective date of this ORDER shall be delayed until such time as New Co. stock is initially sold in a registered public offering of common stock.

   [.6]6. At any time after the public offering, should the Holding Company reacquire control of New MBNA, this ORDER shall become null and void.

   7. Should the FDIC determine that the Applicant has failed to comply fully with the aforesaid provisions, the FDIC shall have the right to revoke this ORDER after giving the Applicant written notice of said revocation and a reasonable opportunity to be heard on the matter. Notwithstanding the foregoing, should the Applicant violate the conditions contained in paragraphs 1, 2, 4, or 6 above, this ORDER shall be immediately null and void, without further hearing on the matter.

   Dated at Washington, D.C., this 14th day of January, 1991.

   By order of the Board of Directors.

ED&O Home | Search Form | Text Search | ED&O Help

Last Updated 6/6/2003 legal@fdic.gov