First Union to Sell Credit Card Business to MBNA

First Union, seeking to halt two years of sliding earnings, said it will sell its credit card business to MBNA Corp. and take a $1-billion pretax gain as a result.

First Union, the No. 6 U.S. bank, said it will sell more than 3 million accounts and $5.5 billion of loans to MBNA, the third-largest credit card issuer in the world.

Charlotte, N.C.-based First Union in June disclosed its plans to find a buyer for the card business, which includes both consumer and business credit cards. The company also closed its Money Store Inc. home-equity lending unit and sold branches as part of a company-wide restructuring.

The bank declined to say how much MBNA paid for the unit. MBNA officials weren’t available to comment. The transaction is expected to close in the third quarter.

First Union’s earnings have fallen steadily since the company bought the Money Store in 1998. Earnings per share have fallen from $1.02 in the third quarter of that year to 73 cents in the second quarter this year. Analysts expect further deterioration this year.

The company said last week it plans to cut as many as 5,291 jobs as part of the restructuring. Most of the employees that will be cut have been notified, the company said.

First Union shares rose 38 cents to close at $29.63 and MBNA fell $2.69 in after-hours trading to $32.50, both on the New York Stock Exchange.