Bank Of America Corp (NYSE: BAC) stock prices fell over 6% in the past 3 months which includes an over 3% drop, on Wednesday mid-trading day alone. News of lowered second quarter estimates may be the trigger to the less than favorable market movement.
Early on May 31st, Bank of America declared that they are completing their plans to sell their consumer credit card business to MBNA LTD, a leading provider of credit cards, which Bank of America acquired in July of 2005 for about $35B in value. The news of the buy-out is not new, just not expected as quickly. In 2016, Lloyds Banking Group PLC (LLOY.L) acquired MBNA from a subsidiary of Bank of America for $2.4B, with about $9.4B in Credit Card receivables and earned approximately $211 Million in interest income during Q1 of 2017. The completion of the purchase was expected at the end of the first half of 2017, now, according to Bank of America’s Press release, it is set to be fully sold by June 1, 2017.
Bank of America press release, states, “Upon closing, Bank of America expects to record a minimal after-tax gain associated with the sale. The primary ongoing impacts to the income statement will be a reduction in net interest income, offset in part by a reduction in non-interest expense. In addition, the sale is expected to improve Basel 3 risk-based capital ratios by approximately 11 basis points under the advanced approaches and 15 basis points under the Standardized approach in the second quarter ending June 30, 2017... The sale completes the transformation of Bank of America's consumer credit card business from a multi-country, multi-brand business to a single-brand business serving core retail customers in the United States.”