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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 10-K



| |   |                                                                             
| | - | ----------------------------------------------------------------------------
| | x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE

ACT OF 1934


For the Fiscal Year Ended December 31,
2003



| |   |                                                                        
| | - | -----------------------------------------------------------------------
| | o | TRANSITION REPORT PURSUANT TO SECTION 13 OR
    15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934


For the transition period
from                     to

Commission file number 1-10683

MBNA Corporation

(Exact name of registrant as specified in its
charter)


|                                                                                   |  |                                                    
|---------------------------------------------------------------------------------- |  | ---------------------------------------------------
|Maryland
    (State or other jurisdiction of
     incorporation or organization)   |  | 52-1713008
    (I.R.S. Employer Identification No.)
|                                                                                  
|1100 North King Street Wilmington, DE
    (Address of principal executive offices) |  | 19884-0131
    (Zip Code)                          

Registrants telephone number, including
area code:(800) 362-6255

Securities Registered Pursuant to
Section 12(b) of the Act:



|                                                                                                                                              |  |                         
|--------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------
|                                                                                                                                              |  | Name of each exchange on
|Title of each class                                                                                                                           |  | which registered        
|                                                                                                                                              |  |                         
|Common Stock, $.01 par value                                                                                                                  |  | New York Stock Exchange 
|7 1/2% Cumulative Preferred Stock, Series A                                                                                                   |  | New York Stock Exchange 
|Adjustable Rate Cumulative Preferred Stock,
    Series B                                                                                      |  | New York Stock Exchange 
|MBNA Capital A 8.278% Capital Securities,
    Series A, guaranteed by MBNA Corporation to the extent
    described therein                    |  | New York Stock Exchange 
|MBNA Capital B Floating Rate Capital Securities,
    Series B, guaranteed by MBNA Corporation to the extent
    described therein             |  | New York Stock Exchange 
|MBNA Capital C 8.25% Trust Originated Preferred
    Securities, Series C, guaranteed by MBNA Corporation to the
    extent described therein  |  | New York Stock Exchange 
|MBNA Capital D 8.125% Trust Originated Preferred
    Securities, Series D, guaranteed by MBNA Corporation to the
    extent described therein |  | New York Stock Exchange 
|MBNA Capital E 8.10% Trust Originated Preferred
    Securities, Series E, guaranteed by MBNA Corporation to the
    extent described therein  |  | New York Stock Exchange 

Securities Registered Pursuant to
Section 12(g) of the
Act:None

Indicate by check mark whether the Registrant
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or such shorter period that
the Registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past 90 days.
Yes x  No o

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of
the Registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this
Form 10-K. o

Indicate by check mark, whether the registrant is
an accelerated filer (as defined in Exchange Act
Rule 12b-2).
Yes x  No o

As of June 30, 2003, the aggregate market
value of the voting and non-voting common equity held by
non-affiliates of the Registrant calculated by reference to the
closing price of the Registrants common stock as reported
on the New York Stock Exchange was $22,521,573,244. As of March
1, 2004, there were outstanding 1,277,671,875 shares of common
stock, par value $.01 per share, which is the only class of the
Registrants common stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the 2003 Annual Report to
Stockholders for the year ended December 31, 2003 are
incorporated by reference into Parts I, II, and IV. Portions of
the Definitive Proxy Statement for the Annual Meeting of
Stockholders to be held May 3, 2004 (Definitive Proxy
Statement) are incorporated by reference into Parts II
and III.



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TABLE OF CONTENTS



|                                                 |                                                                                                         |  |  |  |  |  |  | 
|------------------------------------------------ | ------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                          
|                                                 | ITEM 1. BUSINESS                                                                                       
|                                                 | Overview                                                                                               
|                                                 | Products and Services                                                                                  
|                                                 | Marketing                                                                                              
|                                                 | Credit                                                                                                 
|                                                 | Risk Control                                                                                           
|                                                 | Collection                                                                                             
|                                                 | Operations                                                                                             
|                                                 | Internet and Technology                                                                                
|                                                 | Terms and Conditions                                                                                   
|                                                 | International                                                                                          
|                                                 | Regulatory Matters                                                                                     
|                                                 | Competition                                                                                            
|                                                 | Employees                                                                                              
|                                                 | Important Factors Regarding Forward-Looking Statements                                                 
|                                                 | Available Information                                                                                  
|                                                 | ITEM 2. PROPERTIES                                                                                     
|                                                 | ITEM 3. LEGAL PROCEEDINGS                                                                              
|                                                 | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                            
|EXECUTIVE OFFICERS OF THE REGISTRANT            
|PART II                                         
|                                                 | ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                      
|                                                 | ITEM 6. SELECTED FINANCIAL DATA                                                                        
|                                                 | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS          
|                                                 | ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                    
|                                                 | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                    
|                                                 | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE           
|                                                 | ITEM 9A. CONTROLS AND PROCEDURES                                                                       
|PART III                                        
|                                                 | ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                            
|                                                 | ITEM 11. EXECUTIVE COMPENSATION                                                                        
|                                                 | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|                                                 | ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                
|                                                 | ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                        
|PART IV                                         
|                                                 | ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K                              
|SIGNATURES                                      
|Fourth Supplemental Trust Deed, dated 5/8/2003  
|Executive Non-Compete Agreement                 
|Amended & Restated Employment & Retirement Agmt.
|Change of Control Agreement                     
|Computation of Ratio of Earnings                
|2002 Annual Report to Stockholders              
|Subsidiaries of the Corporation                 
|Consent of Independent Auditors                 
|Section 302 CEO Certification                   
|Section 302 CFO Certification                   
|Section 906 CEO Certification                   
|Section 906 CFO Certification                   



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##### Table of Contents



MBNA CORPORATION

2003 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

|           |  |                                                                                                    |    |      |    | 
|---------- |  | -------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|           |  |                                                                                                    |    | Page
|           |  |                                                                                                    |    |     
|PART I    
|ITEM 1.    |  | Business                                                                                           |    |      | 1  | 
|ITEM 2.    |  | Properties                                                                                         |    |      | 18 | 
|ITEM 3.    |  | Legal Proceedings                                                                                  |    |      | 19 | 
|ITEM 4.    |  | Submission of Matters to a Vote of
    Security Holders                                            |    |      | 19 | 
|           |  | Executive Officers of the Registrant                                                               |    |      | 20 | 
|PART II   
|ITEM 5.    |  | Market for the Registrants Common Equity
    and Related Stockholder Matters                      |    |      | 21 | 
|ITEM 6.    |  | Selected Financial Data                                                                            |    |      | 21 | 
|ITEM 7.    |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations          |    |      | 21 | 
|ITEM 7A.   |  | Quantitative and Qualitative Disclosures about
    Market Risk                                     |    |      | 22 | 
|ITEM 8.    |  | Financial Statements and Supplementary Data                                                        |    |      | 22 | 
|ITEM 9.    |  | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure           |    |      | 22 | 
|ITEM 9A.   |  | Controls and Procedures                                                                            |    |      | 22 | 
|PART III  
|ITEM 10.   |  | Directors and Executive Officers of
    the Registrant                                             |    |      | 22 | 
|ITEM 11.   |  | Executive Compensation                                                                             |    |      | 22 | 
|ITEM 12.   |  | Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters |    |      | 22 | 
|ITEM 13.   |  | Certain Relationships and
    Related Transactions                                                 |    |      | 23 | 
|ITEM 14.   |  | Principal Accountant Fees and Services                                                             |    |      | 23 | 
|PART IV   
|ITEM 15.   |  | Exhibits, Financial Statement Schedules, and
    Reports on Form 8-K                               |    |      | 23 | 
|Signatures |  |                                                                                                    | 28 |     



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PART I






|        |         
|------- | --------
|ITEM 1. | BUSINESS






Overview


MBNA Corporation (the Corporation), a
registered bank holding company, was incorporated under the laws
of Maryland on December 6, 1990. It is the parent company
of MBNA America Bank, N.A. (the Bank), a national
bank organized in January 1991 as the successor to a
national bank formed in 1982 and the Corporations
principal subsidiary. The Bank has two wholly owned foreign bank
subsidiaries, MBNA Europe Bank Limited (MBNA Europe)
formed in 1993 with its headquarters in the U.K. and MBNA Canada
Bank (MBNA Canada) formed in 1997. Through the Bank,
the Corporation is the largest independent credit card lender in
the world and is the leading issuer of endorsed credit cards,
marketed primarily to members of associations and customers of
financial institutions and other organizations. In addition to
its credit card lending, the Corporation makes other consumer
loans, including installment and revolving unsecured loan
products, and offers insurance and deposit products. The
Corporation is the parent of MBNA America (Delaware), N.A.
(MBNA Delaware), a national bank that offers
mortgage loans, aircraft loans and business loan products.

The Corporation conducts its business in Europe
through MBNA Europe and in Canada through MBNA Canada using
substantially the same business strategy and operating methods
in its international activities as it does in the U.S., with
adjustments for local regulation and custom.




Products and Services



| |             
| | ------------
| | Credit Cards

The Corporation offers standard, gold, and
Platinum Pluspersonal and business credit cards and
customizes them for thousands of endorsed affinity programs and
for programs under its own brand name. In addition, the
Corporation offers Customers even more customized, high-end
credit card products such as the Quantumcard. The
Corporations card programs offer a variety of benefits and
features based on the type of endorsing organization and need of
the Customer. These benefits and features include competitive
interest rates, group-specific enhancements, rewards (including
the World Pointsrewards program), and compensation to
the endorsing organization based on the cardholders usage.
The Corporations approach to marketing and underwriting
enables it to offer higher initial credit lines to applicants
and periodic credit-line increases to existing Customers,
resulting in higher usage and average account balances.

The Corporations credit cards are currently
offered under either the MasterCard or Visa brand name and
network. MasterCard and Visa offer the Corporation account
generation and transaction volume incentives in order to promote
their respective brands. In addition, in connection with the
Corporations co-branding arrangements, MasterCard and Visa
enter into endorsing arrangements with certain of the
Corporations co-branding partners. See discussion of
co-branding under Marketing on pages 2 through
4 below. In January 2004, the Corporation entered into an
agreement with American Express to offer its credit cards under
the American Express brand and network and intends to begin
offering American Express branded cards upon satisfaction of
certain conditions contained in the agreement.



| |                     
| | --------------------
| | Other Consumer Loans

The Corporations other consumer loan
products include unsecured lines of credit accessed by check or
electronically with either fixed monthly payments or minimum
payments similar to credit card accounts. Customers use these
products primarily for large purchases or consolidation of other
consumer debt. The Corporation markets these products to its
existing credit card Customers and to others. In the U.S., the
Corporation also offers sales finance accounts, which are
unsecured lines of credit marketed to customers of a

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limited number of retailers and service providers
and include instant financing offered at retail points of sale.
In 2003, the Corporation began placing less emphasis on the
marketing of sales finance accounts. Through MBNA Europe, the
Corporation also offers fixed term unsecured loan products with
fixed monthly payments.


The Corporation offers specialty finance
products, including mortgage and aircraft loans, to consumers in
the U.S. through MBNA Delaware and unsecured lines of credit to
small businesses through the Bank. The Corporations
mortgage loans primarily consist of home equity loans offered as
a debt consolidation tool. The mortgage loans also include
purchase money and refinance loans. The Corporations
mortgage loans are offered primarily to the Corporations
credit card and other consumer loan Customers. The Corporation
originates and then sells the mortgage loans to third parties.
The Corporation does not service any mortgage loans.



| |         
| | --------
| | Deposits

In the U.S., the Corporation offers money market
deposit accounts and certificates of deposit through the Bank.
Money market deposit accounts provide Customers with liquidity
and convenience of service, as well as insurance up to $100,000
per depositor by the Federal Deposit Insurance Corporation
(FDIC). Certificates of deposit are traditional
fixed term investments with maturities that typically range from
six to sixty months, and are insured by the FDIC up to $100,000.
Deposit products are offered to members of the
Corporations endorsing associations, to existing credit
card Customers and to others.



| |                          
| | -------------------------
| | Business Lending Products

The Corporation offers business lending products
in the U.S. (through MBNA Delaware), the U.K., and Canada. The
Corporations business lending products include general
purpose business credit cards marketed primarily to small
businesses, and purchasing and corporate cards for small and
larger businesses for business, travel and corporate purchasing.



| |          
| | ---------
| | Insurance

The Corporation offers credit protection products
to credit card and other consumer loan Customers of the Bank,
and markets credit insurance to Customers of MBNA Europe and
MBNA Canada. In addition, the Corporation markets credit-related
life and disability insurance to Customers whose accounts have
been acquired from other lenders. These insurance and credit
protection products are marketed only to the Corporations
loan Customers, and only in conjunction with their loan accounts
with the Corporation and not any other loan accounts. A
third-party vendor manages aspects of the sale, retention and
administration of certain of these products. Customer acceptance
of these products generally has been higher in the U.K. than in
the U.S. and, as a result, these products have accounted for a
higher proportion of U.K. revenue than U.S. revenue.



| |                  
| | -----------------
| | Insurance Finance

In January 2004, MBNA Europe acquired
Premium Credit Limited, an independent premium finance company
in the U.K. Premium Credit makes loans to businesses, including
professionals and small business owners, to pay premiums on
property, general liability, and other types of insurance.
Premium Credit also provides loans to retail consumers for
financing of premiums on insurance products. Premium Credit
generates these loans through its relationships with a network
of insurance companies, agents, and brokers. At year-end 2003,
Premium Credit had £814 million (approximately
$1.5 billion) in outstanding loans.




Marketing

The Corporation markets its products primarily
through endorsements from associations, financial institutions,
commercial firms, and others. The Corporation directs its
marketing efforts primarily to members and customers of these
endorsing organizations, and to targeted lists of people with a
strong common interest. The Corporation is the recognized leader
in endorsed marketing, with endorsements from thousands of

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organizations and businesses, including
professional associations, financial institutions, colleges and
universities, sports teams, and major retailers.


The Corporation generally customizes marketing
programs for an endorsing organization in order to attract the
organizations members or customers to the
Corporations products. For example, credit cards issued to
the organizations members or customers usually carry
custom graphics and the name and logo of the endorsing
organization.

The Corporations endorsing relationships
with commercial firms, including professional sports teams and
retailers, include co-branded cards and typically include
incentives for Customers to purchase services or merchandise
from the co-branding firm. In the U.S., the Corporation also
markets sales finance accounts to finance purchases through a
limited number of retailers or service providers.

Under the Corporations agreements with
endorsing organizations, the Corporation makes royalty payments
to the endorsing organizations who grant the Corporation the
exclusive right to market the Corporations products to the
organizations members or customers and provide their
endorsements and mailing lists. Some organizations, such as
financial institutions, also market the Corporations
products to their members or customers. The endorsing agreements
generally have a term of five years. The royalty payments the
Corporation pays to the endorsing organizations typically
include payments based on the number of new accounts,
activation, and revenue sharing (for example, a percentage of
sales volume on accounts). In some cases the Corporation
advances future compensation to the organization.

The Corporation provides rewards points based on
spending volumes to certain Customers, who may include members
or customers of the endorsing organizations. The Customers may
redeem the rewards points for cash, merchandise, or services. In
some cases the Corporation is responsible for the cost of the
rewards points and in other cases the endorsing organization is
responsible for the cost of the rewards points. In some cases
the Corporation pays the endorsing organization a portion of the
cost of the rewards points when the endorsing organization is
responsible for them. See Royalties to Endorsing
Organizations in Note 3 on page 73 of the 2003
Annual Report to Stockholders, which is incorporated herein by
reference.

The Corporation primarily uses direct mail, point
of sale, event marketing, telesales, and Internet marketing to
market its credit cards and other products. Each year, the
Corporation develops numerous different marketing campaigns,
customized for the Corporations endorsing organizations,
generating millions of direct mail pieces designed to add
accounts and promote account usage. The Corporations
in-house advertising agency designs custom graphics for credit
cards and prepares direct mail programs and advertisements. The
Corporation conducts Internet marketing through a combination of
banner, e-mail, search engine, and other advertisements.

In addition, the Corporations marketing
activities include efforts to retain profitable accounts and
programs designed to activate new accounts and stimulate usage
of existing accounts, primarily through access check mailings,
balance transfer incentives and purchase reward programs.

The Corporation selectively purchases credit
card, other consumer loan, and business loan portfolios from
other financial institutions. Generally, the Corporation
purchases portfolios when it can also obtain ongoing endorsing
arrangements from the seller or from the portfolios
existing endorsing organizations. See Loan
Receivables on pages 26 through 29 of the 2003 Annual
Report to Stockholders, which is incorporated herein by
reference, for the amount of the Corporations portfolio
purchases.

The Corporation conducts marketing activities
through regional and international offices. These regional and
international offices assist the Corporation to obtain
endorsements, increase its familiarity with local markets,
better understand the needs and motivations of Customers, and
assess the competitive environment. In the U.S., MBNA Marketing
Systems, Inc. (MBNA Marketing Systems), a subsidiary
of the Bank, has regional offices in Maine, Ohio, Texas,
Maryland, Georgia, New Jersey, California, and New York. MBNA
Europe has its headquarters in Chester, England and offices in
London, England and Dublin, Ireland. In 2002, MBNA Europe opened
a new branch in Las Rozas, Spain and began marketing in Spain.
MBNA Ireland Limited has offices in Carrick-on-Shannon, Ireland.
MBNA Canada has its headquarters in Ottawa, Ontario and a sales
and marketing office in Montreal, Quebec.

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MBNA Marketing Systems has 16 telesales
facilities in 10 states. As of December 31, 2003, it
employed approximately 3,300 people in telesales, the majority
of whom worked part-time. The telesales organization generates
new accounts by calling prospects obtained from membership or
customer lists of endorsing organizations and other prospect
lists and calls existing Customers to market products.

In 2003, through telesales to new Customers, the
Corporation added approximately 15% of its new accounts in the
U.S. and 6.4% of its new accounts in the U.K., Ireland, and
Spain (excluding accounts acquired through portfolio
acquisitions). In recent periods the Corporation has begun to
rely less on telesales in the U.S. In future periods, the
Corporation expects to continue to rely less on telesales in the
U.S. and more on other marketing channels, such as the Internet,
point of sale, and event marketing, because of changing consumer
attitudes and acceptance of telesales and federal and state
regulatory initiatives such as do-not-call lists that restrict
telesales. See Regulatory Matters  Telemarketing
Regulation on page 13.




Credit

The credit risk of lending to each Customer is
evaluated through the combination of human judgment and the
application of various credit scoring models and other
statistical techniques. In making a credit determination, the
Corporation considers an applicants capacity and
willingness to repay, stability and other factors. Important
information in performing this credit assessment includes an
applicants income, debt-to-income levels, residence and
employment stability, the rate at which new credit is being
acquired, and the manner in which the applicant has handled the
repayment of previously granted credit. An applicant who has
favorable credit capacity and credit history characteristics is
more likely to be approved and to receive a relatively higher
credit line assignment. Favorable characteristics include low
debt-to-income levels, a long history of steady employment, and
little or no history of delinquent payments on other debt.

The Corporation develops credit scoring models to
evaluate common applicant characteristics and their correlation
to credit risk and utilizes such models in making credit
assessments. The scoring models use the information available in
the Customers application and credit report to provide a
general indication of the applicants credit risk.
Periodically, the scoring models are validated and, if
necessary, realigned to maintain their accuracy and reliability.

In 2003, less than half of the credit
applications received by the Corporation were approved. A
significant percentage of credit applications that present high
risk are declined through an automated decisioning process. Most
decisions to approve a credit application are made by credit
analysts who consider the credit factors described above and
assign credit lines based upon this assessment. Credit analysts
are encouraged to call applicants when they believe additional
information, such as an explanation of delinquencies or debt
levels, may assist the analyst in making the appropriate credit
decision. Credit analysts undergo a comprehensive education
program that focuses on evaluating an applicants
creditworthiness.

Once the credit analyst makes a decision, further
levels of review are automatically triggered based on an
analysis of the risk of each decision. This analysis is derived
from previous experiential data and makes use of credit scores
and other statistical techniques. Credit analysts also review
applications obtained through pre-approved offers to ensure
adherence to credit standards and assign an appropriate credit
limit as an additional approach to managing credit risk.

Some credit applications that present low risk
are approved through an automated decisioning process. In
addition, credit applications for certain of the
Corporations accounts are decisioned through an automated
system in order to provide instant financing for Customers
purchases with retailers or service providers.

Credit lines for existing Customers are regularly
reviewed for credit line increases, and when appropriate, credit
line decreases. The Corporations Portfolio Risk Management
division independently reviews selected applications to ensure
quality and consistency.

Prior to acquiring a portfolio of loans, the
Corporation reviews the historical performance and seasoning of
the portfolio (including the portfolios delinquency and
loss characteristics, average balances, attrition rates, yields
and collection performance) and reviews the account management
and underwriting policies and procedures of the financial
institution selling the loan portfolio. Accounts that have been
purchased by the

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Corporation were originally opened using criteria
established by financial institutions other than the Corporation
and may not have been subject to the same level of credit review
as accounts originated by the Corporation. Once these accounts
have been purchased and transferred to the Corporation for
servicing, they are generally managed in accordance with the
same policies and procedures as accounts originated by the
Corporation.





Risk Control

The Corporation manages risk at the Customer
level through sophisticated analytical techniques combined with
regular judgmental review. Transactions are evaluated at the
point of sale, where risk levels are balanced with profitability
and Customer satisfaction. In addition, Customers showing signs
of financial stress are periodically reviewed, a process which
includes an examination of the Customers credit file, the
Customers behavior with the Corporations accounts,
and many times a phone call for clarification of the situation.
As a result of these reviews, the Corporation may block use of
accounts, reduce credit lines on certain accounts, and increase
the annual percentage rates on certain accounts (generally after
giving the Customer an opportunity to reject the rate increase,
unless the increase was triggered by an event set out in the
credit agreement).

A balanced approach is also used when stimulating
portfolio growth. Risk levels are measured through statistical
models that incorporate payment behavior, employment
information, income information, and transaction activity.
Credit bureau scores and attributes are obtained and combined
with internal information to allow the Corporation to increase
credit lines and promote account usage while balancing
additional risk.

The Corporation manages fraud risk through a
combination of judgmental reviews and sophisticated technology
to detect and prevent fraud as early as possible. Technologies
and strategies utilized include a neural net based fraud score,
expert systems and fraud specific authorizations strategies.
Address and other demographic discrepancies are investigated as
part of the credit decision to identify and prevent identity
theft.




Collection

The Corporations collection philosophy is
to work with each Customer with a past due account at an early
stage of delinquency in a persistent yet professional manner.
The Corporation employs several computerized systems to assist
in the collection of past due accounts. These systems analyze
each Customers purchase and repayment habits, and select
accounts for initial contact with the objective of contacting
the highest risk accounts first. Customers who are experiencing
significant financial problems and who may consider filing for
bankruptcy are referred to specialists who offer alternative
payment programs to bankruptcy, including debt counseling,
reduced interest rates, and fixed payment arrangements.

The Corporation works with Customers continually
at each stage of delinquency. The Corporations policy is
to charge off open-end delinquent retail loans by the end of the
month in which the account becomes 180 days contractually
past due and closed-end delinquent retail loans by the end of
the month in which they become 120 days contractually past
due. Delinquent bankrupt accounts are charged off the end of the
second calendar month following receipt of notification of
filing from the applicable court, but not later than the
applicable 180-day or 120-day timeframes described above.
Accounts of deceased Customers are charged off when the loss is
determined, but not later than the applicable 180-day or 120-day
timeframes described above. Fraudulent accounts are charged off
the end of the calendar month of the 90th day after identifying
the account as fraudulent, but not later than the applicable
180-day or 120-day timeframes described above. Accounts failing
to make a payment within charge-off policy timeframes are
written off. Managers may on an exception basis defer charge-off
of an account for another month, pending continued payment
activity or other special circumstances. Senior manager approval
is required on all such exceptions to charge-off. If an account
has been charged-off, it may be sold to a third party or
retained by the Corporation for recovery.

A Customer account may be re-aged to remove
existing delinquency. Generally, the intent of a re-age is to
assist Customers who have recently overcome temporary financial
difficulties and have demonstrated both the ability and
willingness to resume regular payments, but may be unable to pay
the entire past due amount. To qualify for re-aging, the account
must have been opened for at least one year and cannot have been
re-aged

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during the preceding 365 days. An account
may not be re-aged more than two times in a 5-year period. To
qualify for re-aging, the Customer must also have made three
regular minimum monthly payments within the last 90 days.
In addition, the Corporation may re-age the account of a
Customer who is experiencing long-term financial difficulties
and apply modified, concessionary terms and conditions to the
account. Such additional re-ages are limited to one in a 5-year
period and must meet the qualifications for re-ages described
above, except that the Customers three consecutive minimum
monthly payments may be based on the modified terms and
conditions applied to the account. The Corporations senior
management and the Corporations Loan Review Department
approve all re-age strategies. Re-ages can have the effect of
delaying charge-offs. For a discussion on the amount of re-ages
and their impact, see Loan Quality  Re-aged
Loans on page 42 of the 2003 Annual Report to
Stockholders, which is incorporated herein by reference.





Operations

Account processing services performed by MBNA
Technology, Inc. (MBNA Technology), a wholly-owned
subsidiary of the Bank, include data processing, payment
processing, statement rendering, card production and network
services. MBNA Technologys data network provides an
interface to MasterCard and Visa for performing authorizations
and settlement funds transfers. Most data processing and network
functions are performed at MBNA Technologys facilities in
Dallas, Texas, and Newark, Delaware. MBNA Technology generates
and mails monthly statements to Customers summarizing account
activity and processes Customer payments. Third-party vendors
provide data processing and print and mail services in the U.K.
and account processing services for the Corporations U.S.
business card products. The Corporation depends on the continued
availability and reliability of the MasterCard and Visa networks
to provide for the exchange of financial information and funds
between merchants and the Corporation.




Internet and Technology

The Corporation offers several Internet-based
products and services, including real-time online account
access, credit card and consumer loan online applications,
deposit products information, online balance transfers, and
online shopping and security features.

The Corporation uses sophisticated systems and
technology in all aspects of its business operations to enhance
Customer service and improve efficiency. These systems include
marketing databases, advanced telecommunications networks to
support Customer service and telesales, a credit decisioning
system which processes credit card applications with on-line
credit bureaus to support credit, neural networks to identify
and prevent fraud, and selective statement insertion to
customize communications with Customers. These systems enable
the Corporation to implement customized marketing and service
strategies for endorsing organizations. The Corporation relies
primarily on internal development of technology solutions to
ensure the flexibility, quality, and responsiveness of computer
and telecommunication systems needed in its business.

In 2004, the Corporation expects to complete a
multi-phase project, begun in 2002, extending the use of the
Corporations U.S. core Customer information systems to
MBNA Europes business in the U.K. and Ireland, which
currently relies on third-party vendors for such information
systems. MBNA Canada already uses this system. The project will
provide standardization of systems, appropriate infrastructure
for an internationalized technical platform and
systems enhancements for the MBNA Europe processing environment.




Terms and Conditions

Each Customer and the Corporation enter into an
agreement setting forth the terms and conditions of the
Customers account. The Corporation reserves the right to
add or change any terms, conditions, services or features of its
accounts at any time, including increasing or decreasing
periodic finance charges, other charges, and minimum payment
terms. The Customer agreement generally provides that the
Corporation may apply such changes, when applicable, to current
outstanding balances as well as to future transactions. In the
U.S., the Customer can avoid a rate increase by notifying the
Corporation and then no longer using the account, unless the
increase was triggered by an event set out in the agreement. In
some cases the Corporation will

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initiate a change in terms only after the
Customer has accepted the change, such as by continued use of
the account after notice.


A Customer may use an account for purchases and
cash advances. Periodic finance charges are calculated monthly
by multiplying the applicable average daily balance on the
account by the applicable daily periodic rate and by the number
of days in the billing cycle.

The Corporations other consumer loan
accounts include accounts with a minimum monthly payment similar
to credit card accounts, and with a fixed monthly payment
amount. On the accounts with a fixed monthly payment amount,
Customers take advances on the account and repay the advances
over a fixed term with a fixed monthly payment amount, with the
term and payment amount reset with each new advance.

The Corporation offers fixed and variable rates
on accounts and also offers temporary promotional rates. In the
U.S., variable rates are offered at a percentage rate tied to
the U.S. prime rate published in The Wall Street Journal. See
Interest Rate Sensitivity on pages 57 though 58 of
the 2003 Annual Report to Stockholders, which is incorporated
herein by reference, for further discussion of the interest
rates on the Corporations accounts.

The Corporation assesses annual, late, overlimit,
returned check, cash advance, express payment, and other
miscellaneous fees earned on the Corporations credit card
and other consumer loans in accordance with each Customers
account agreement.




International

The Corporations international activities
are performed primarily through the Banks two foreign bank
subsidiaries, MBNA Europe and MBNA Canada. See Note 28:
Foreign Activities on page 94 of the 2003 Annual Report to
Stockholders, which is incorporated herein by reference, for
certain financial information on the Corporations
international activities. The Corporation has been marketing
credit card products through MBNA Europe since 1993 and through
MBNA Canada since 1997. MBNA Europe and MBNA Canada also offer
other consumer loan products. The Corporation uses substantially
the same business strategy and operating methods in its
international activities as in the U.S. Although MBNA Europe
relies on third party vendors for some processing functions, it
uses substantially the same processes as are used in the U.S.




Regulatory Matters

The earnings of the Bank and the Corporation are
affected by general economic conditions, monetary policies and
the actions of various regulatory authorities, including the
Board of Governors of the Federal Reserve System (the
Federal Reserve Board), the Office of the
Comptroller of the Currency (the OCC), and the
Federal Deposit Insurance Corporation (the FDIC). In
addition, numerous federal and state laws and regulations affect
the activities of the Corporation. This regulatory framework is
intended primarily for the protection of depositors and deposit
insurance funds and not for the protection of security holders.

Set forth below is a description of the material
elements of the laws, regulations, policies and other regulatory
matters affecting the Corporation and its subsidiaries. The
description is qualified in its entirety by reference to the
full text of the statutes and regulations, as amended, that are
described.



| |        
| | -------
| | General

As a bank holding company, the Corporation is
subject to regulation under the Bank Holding Company Act of 1956
(the BHCA) and to the BHCAs examination and
reporting requirements. Under the BHCA, bank holding companies
may not directly or indirectly acquire the ownership or control
of more than five percent of the voting shares or substantially
all of the assets of any company, including a bank, without the
prior approval of the Federal Reserve Board. In addition, bank
holding companies generally are prohibited under the BHCA from
engaging in non-banking activities, subject to certain
exceptions. The Gramm-Leach-Bliley Act, enacted in 1999 and
discussed below, broadened the range of permissible activities.

7



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##### Table of Contents



The Bank and MBNA Delaware are subject to
supervision and examination by the OCC, the banks primary
regulator. The Bank and MBNA Delaware are insured by, and
therefore are subject to the regulations of, the FDIC and are
also subject to requirements and restrictions under federal and
state law, including requirements to maintain reserves against
deposits, restrictions on the types and amounts of loans that
may be granted and the interest that may be charged thereon, and
limitations on the types of investments that may be made and the
types of services that may be offered.

MBNA Europe is subject to regulation and
supervision by the U.K. Financial Services Authority, the
Federal Reserve Board, and the OCC. MBNA Canada is subject to
regulation and supervision by the Office of the Superintendent
of Financial Institutions, the Canadian Deposit Insurance
Corporation, the Federal Reserve Board, and the OCC.



| |          
| | ---------
| | Dividends

The principal source of funds to the Corporation
to pay dividends, interest and principal on debt securities and
to meet other obligations is dividends from the Bank. The Bank
and MBNA Delaware are subject to limitations on the dividends
they may pay to the Corporation. The Corporation may also be
subject to limitations on the payment of dividends to
stockholders. See Dividend Limitations on pages 45
through 46 and Note 25: Dividend Limitations on page
92 of the 2003 Annual Report to Stockholders, which are
incorporated herein by reference. In addition, the Corporation,
the Bank and MBNA Delaware are subject to various regulatory
policies and requirements relating to the payment of dividends,
including requirements to maintain capital above regulatory
minimums. The appropriate federal regulatory authority is
authorized to determine, under certain circumstances relating to
the financial condition of a bank or bank holding company, that
the payment of dividends would be an unsafe or unsound practice
and to prohibit payment thereof. Moreover, neither the Bank nor
MBNA Delaware may pay a dividend if it is undercapitalized or
would become undercapitalized as a result of paying the
dividend. Banking regulators have indicated that banking
organizations should generally pay dividends only out of current
operating earnings.



| |                                             
| | --------------------------------------------
| | Intercompany Borrowings and
    Transactions

There are various legal restrictions on the
extent to which the Corporation and its non-bank subsidiaries
may borrow or otherwise obtain credit from, sell assets to, or
engage in certain other transactions with, the Bank and MBNA
Delaware, the Corporations U.S. bank subsidiaries. In
general, these restrictions require that any such extensions of
credit must be secured by designated amounts of specified
collateral and the aggregate of such transactions are limited,
as to any one of the Corporation or its non-bank subsidiaries,
to 10% of the U.S. bank subsidiarys capital stock and
surplus, and as to the Corporation and all such non-bank
subsidiaries in the aggregate, to 20% of the U.S. bank
subsidiarys capital stock and surplus.

Extensions of credit and other transactions
between one of the Corporations U.S. bank subsidiaries on
the one hand, and the Corporation or one of its non-bank
subsidiaries on the other, must be on terms and under
circumstances, including credit standards, that are
substantially the same or at least as favorable to the
Corporations U.S. bank subsidiary as those prevailing at
the time for comparable transactions between the
Corporations U.S. bank subsidiary and non-affiliated
companies.



| |                     
| | --------------------
| | Capital Requirements

The Federal Reserve Board, the OCC and the FDIC
have substantially similar risk-based capital and leverage ratio
guidelines for banking organizations. The guidelines are
intended to ensure that banking organizations have adequate
capital given the risk levels of their assets and off-balance
sheet financial instruments.

Under the risk-based capital guidelines adopted
by the Federal Reserve Board for bank holding companies, such as
the Corporation, and the OCC for national banks, such as the
Bank, the minimum requirement for the ratio of total capital (as
defined below) to risk-weighted assets (including certain
off-balance sheet items, such as interest rate swaps) is 8%. At
least half of the total capital may be comprised of common
stockholders equity, qualifying non-cumulative perpetual
preferred stock, a limited amount of

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##### Table of Contents



qualifying cumulative perpetual preferred stock
and minority interests in the equity accounts of consolidated
subsidiaries, less goodwill and certain other intangible assets
(Tier 1 capital). The remainder may consist of
mandatory convertible debt securities, a limited amount of
subordinated debt, other preferred stock that does not qualify
as Tier 1 capital and a limited amount of reserves for possible
credit losses (Tier 2 capital and together with Tier
1 capital, Total capital). In addition, the Federal
Reserve Board has adopted a minimum leverage ratio (Tier 1
capital to average total assets less goodwill and certain other
intangible assets) of 3% for bank holding companies that have
the agencys highest supervisory rating or have implemented
the Federal Reserves market risk capital measure, and 4%
for all other bank holding companies. See  Capital
Adequacy on page 46 and Note 26: Capital
Adequacy on page 93 of the 2003 Annual Report to
Stockholders, which are incorporated herein by reference. Bank
holding companies and banks may be subject to higher risk-based
and leverage capital ratios depending on other specific factors,
such as interest rate risk, concentrations of credit risk, and
the conduct of non-traditional activities.


The U.S. federal bank regulatory agencies
risk-capital guidelines are based upon the 1988 capital accord
of the Basel Committee on Banking Supervision (the Basel
Committee). The Basel Committee is a committee of central
banks and bank supervisors/regulators from the major
industrialized countries that develops broad policy guidelines
that each countrys supervisors can use to determine the
supervisory policies they apply. In April 2003, the Basel
Committee issued a consultative document for public comment,
The New Basel Capital Accord, which proposes
significant revisions to the current Basel Capital Accord. The
proposed new accord would establish a three-part framework for
capital adequacy that would include: (1) minimum capital
requirements; (2) supervisory review of an
institutions capital adequacy and internal assessment
process; and (3) market discipline through increased
disclosures regarding capital adequacy.

In August 2003, an advance notice of
proposed rulemaking was published by the Federal Reserve Board,
the OCC, the FDIC and the Office of Thrift Supervision
(collectively the Agencies). The advance notice of
proposed rulemaking was titled Risk-Based Capital
Guidelines; Implementation of New Basel Capital Accord; Internal
Ratings-Based Systems for Corporate Credit and Operational Risk
Advanced Measurement Approaches for Regulatory Capital; Proposed
Rule and Notice (Proposed Regulatory
Guidance). The Proposed Regulatory Guidance sets forth for
industry comment the Agencies views on a proposed
framework for implementing the New Basel Capital Accord in the
United States. In particular, the Proposed Regulatory Guidance
describes significant elements of the Advanced Internal
Ratings-Based approach for credit risk and the Advanced
Measurement Approaches for operational risk. The Agencies have
determined that the advanced risk and capital measurement
methodologies of the new accord will be applied on a mandatory
basis for large, internationally active banking organizations.
Institutions subject to the mandatory application of the
advanced approaches would be those institutions with total
banking assets of $250 billion or more or those
institutions, such as the Corporation, with total
on-balance-sheet foreign exposure of $10 billion or more.

The final form of the rules to be adopted by U.S.
bank regulators is still to be determined. Adoption of the
proposed new accord could lower capital ratios for U.S. banking
organizations, such as the Corporation and its banking
subsidiaries, due in part to a new capital charge for
operational risk and to the final treatment of certain credit
risk exposures, including the treatment of credit card loans,
unused line amounts and asset securitizations, in calculating
regulatory capital.



| |                            
| | ---------------------------
| | Corporation Support of Bank

Under the National Bank Act, if the capital stock
of a national bank is impaired by losses or otherwise, the OCC
is authorized to require payment of the deficiency by assessment
upon the banks stockholders and, if any such assessment is
not paid, to sell the stock to make good the deficiency. Under
Federal Reserve Board policy, the Corporation is expected to act
as a source of financial strength to its U.S. bank subsidiaries
and to commit resources to support them. Any non-deposit
obligation of the Corporations U.S. bank subsidiaries to
the Corporation is subordinate in right of payment to deposits,
and certain obligations of the Corporations U.S. bank
subsidiaries to the Corporation are subordinate in right of
payment to certain other indebtedness of the Corporations
U.S. bank subsidiaries. In the event of the Corporations
bankruptcy, any commitment by the Corporation to a federal bank
regulatory agency to maintain the capital of its U.S. bank
subsidiaries will be assumed by the bankruptcy trustee and
entitled to priority of payment.

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| |                         
| | ------------------------
| | Prompt Corrective Action

The Federal Deposit Insurance Act, as amended
(the FDIA), requires, among other things, the
federal banking agencies to take prompt corrective
action in respect of depository institutions that do not
meet minimum capital requirements. The FDIA sets forth the
following five capital tiers: well capitalized,
adequately capitalized,
undercapitalized, significantly
undercapitalized and critically
undercapitalized. A depositary institutions capital
tier will depend upon how its capital levels compare with
various relevant capital measures and certain other factors, as
established by regulation. The relevant capital measures are the
total capital ratio, the Tier 1 capital ratio and the leverage
ratio.

Under the regulations adopted by the federal
regulatory authorities, a bank insured by the FDIC, such as the
Bank, will be: (1) well capitalized if it has a
total capital ratio of 10 percent or greater, a Tier 1
capital ratio of 6 percent or greater and a leverage ratio
of 5 percent or greater and is not subject to any order or
written directive by any such regulatory authority to meet and
maintain a specific capital level for any capital measure; (2)
adequately capitalized if it has a total capital
ratio of 8 percent or greater, a Tier 1 capital ratio of
4 percent or greater and a leverage ratio of 4 percent
or greater (3 percent in certain circumstances) and is not
well capitalized; (3) undercapitalized
if it has a total capital ratio of less than 8 percent, a
Tier 1 capital ratio of less than 4 percent or a leverage
ratio of less than 4 percent (3 percent in certain
circumstances); (4) significantly undercapitalized
if it has a total capital ratio of less than 6 percent, a
Tier 1 capital ratio of less than 3 percent or a
leverage ratio of less than 3 percent and (5)
critically undercapitalized if its tangible equity
is equal to or less than 2 percent. An institution may be
downgraded to, or deemed to be in, a capital category that is
lower than is indicated by its capital ratios if it is
determined to be in an unsafe or unsound condition or if it
receives an unsatisfactory examination rating with respect to
certain matters. At December 31, 2003, the Bank and MBNA
Delaware were each considered well capitalized. See
Note 26: Capital Adequacy on page 93 of
the 2003 Annual Report of Stockholders, which is incorporated
herein by reference.

The FDIA generally prohibits a depository
institution from making any capital distributions (including
payment of a dividend) or paying any management fee to its
parent holding company if the depository institution would
thereafter be undercapitalized.
Undercapitalized institutions are subject to growth
limitations and are required to submit a capital restoration
plan. The agencies may not accept such a plan without
determining, among other things, that the plan is based on
realistic assumptions and is likely to succeed in restoring the
depository institutions capital. In addition, for a
capital restoration plan to be acceptable, the depository
institutions parent holding company must guarantee that
the institution will comply with such capital restoration plan.
The aggregate liability of the parent holding company is limited
to the lesser of (1) an amount equal to five percent of the
depository institutions total assets at the time it became
undercapitalized and (2) the amount which is necessary (or
would have been necessary) to bring the institution into
compliance with all capital standards applicable with respect to
such institution as of the time it fails to comply with the
plan. If a depository institution fails to submit an acceptable
plan, it is treated as if it is significantly
undercapitalized.

Significantly undercapitalized
depository institutions may be subject to a number of
requirements and restrictions, including orders to sell
sufficient voting stock to become adequately
capitalized, requirements to reduce total assets, and
cessation of receipt of deposits from correspondent banks.
Critically undercapitalized institutions are subject
to the appointment of a receiver or conservator.



| |                          
| | -------------------------
| | FDICIA and FDIC Insurance

The Federal Deposit Insurance Corporation
Improvement Act of 1991 (FDICIA) provided increased
funding for the Bank Insurance Fund (BIF) of the
FDIC and provided for expanded regulation of banks and bank
holding companies. The regulation includes expanded federal
banking agency examinations and increased powers of federal
banking agencies to take corrective action to resolve the
problems of insured depository institutions with capital
deficiencies. These powers vary depending on which of several
levels of capitalization a particular institution meets.

FDIC regulations adopted under FDICIA prohibit a
bank from accepting brokered deposits unless (i) it is well
capitalized or (ii) it is adequately capitalized and
receives a waiver from the FDIC. A bank that is

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adequately capitalized and that accepts brokered
deposits under a waiver from the FDIC may not pay an interest
rate on any deposit in excess of 75 basis points over certain
prevailing market rates. There are no such restrictions on a
bank that is well capitalized. As of December 31, 2003 the
Bank met the FDICs definition of a well capitalized
institution for purposes of accepting brokered deposits. For the
purposes of the brokered deposit rules, a bank is defined to be
well capitalized if it maintains a ratio of Tier 1
capital to risk-adjusted assets of at least 6%, a ratio of Total
capital to risk-weighted assets of at least 10% and a leverage
ratio of at least 5% and is not subject to any order, direction
or written agreement to maintain specific capital levels. Under
the regulatory definition of brokered deposits, as of
December 31, 2003, the Bank had brokered deposits of
$6.5 billion. See Deposits on pages 54 through
55 of the 2003 Annual Report of Stockholders, which is
incorporated herein by reference, for discussion of brokered
deposits.




| |                  
| | -----------------
| | Deposit Insurance

The Bank and MBNA Delaware are subject to FDIC
deposit insurance assessments for the BIF. Each financial
institution is assigned to one of three capital groups 
well capitalized, adequately capitalized or undercapitalized
 and further assigned to one of three subgroups within a
capital group, on the basis of supervisory evaluations by the
institutions primary federal and, if applicable, state
supervisors and other information relevant to the
institutions financial condition and the risk posed to the
applicable insurance fund. The assessment rate applicable to the
Bank and MBNA Delaware in the future will depend in part upon
the risk assessment classification assigned by the FDIC and in
part on the BIF assessment schedule adopted by the FDIC. FDIC
regulations currently provide that premiums related to deposits
assessed by the BIF are to be assessed at a rate of between 0
cents and 27 cents per $100 of deposits.

Because of favorable loss experience and a
healthy reserve ratio in the BIF, well capitalized and well
managed banks, including the Corporations U.S. bank
subsidiaries, have in recent years paid no premiums for FDIC
insurance. In the future, even well capitalized and well managed
banks may be required to pay premiums on deposit insurance. The
amount of any such premiums will depend on the outcome of
legislative and regulatory initiatives as well as the BIF loss
experience and other factors.

The Deposit Insurance Funds Act of 1996 also
separated the Financing Corporation assessment to service the
interest on its bond obligations from the BIF and the Savings
Association Insurance Fund assessments. The amount assessed on
individual institutions by the Financing Corporation will be in
addition to the amount, if any, paid for deposit insurance
according to the Financing Corporations risk-related
assessment rate schedules. The Financing Corporation assessment
rates may be adjusted quarterly to reflect a change in
assessment base for the BIF. The current Financing Corporation
annual assessment rate is 1.54 cents per $100 of deposits.



| |                                                                                    
| | -----------------------------------------------------------------------------------
| | Regulation of the Credit Card and Other
    Consumer Lending Businesses in the U.S.

The relationship between the Corporation and its
Customers in the U.S. is extensively regulated by federal and
state consumer protection laws. The Truth in Lending Act
requires consumer lenders to make certain disclosures along with
their applications (for credit card accounts) and solicitations,
upon opening an account and with each periodic statement. The
Act also imposes certain substantive requirements and
restrictions on lenders and provides Customers with certain
rights to dispute unauthorized charges and to have billing
errors corrected promptly. Customers are also given the right to
have payments promptly credited to their accounts.

The Equal Credit Opportunity Act prohibits
lenders from discriminating in extending credit on certain
criteria such as an applicants sex, race and marital
status. In order to protect borrowers from such discrimination,
the Act requires that lenders disclose the reasons they took
adverse action against an applicant or a Customer.

The Fair Credit Reporting Act generally regulates
credit reporting agencies, but also imposes some duties on
lenders as users of consumer credit reports. For instance, the
Act prohibits the use of a consumer credit report by a lender
except in connection with a proposed business transaction with
the consumer. The Act also requires lenders to notify consumers
when taking adverse action based upon information obtained from
credit

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##### Table of Contents



reporting agencies. Portions of the Act pre-empt
state law and establish a uniform, national standard for
financial institutions using consumer credit reports. In
December 2003, provisions of the Act, which would have
expired on January 1, 2004, were extended and important
aspects of the Act that pre-empted state law were made permanent
through the Fair and Accurate Credit Transactions Act of 2003.


The federal regulators are authorized to impose
penalties for violations of these statutes and, in certain
cases, to order the Corporation to pay restitution to injured
Customers. Customers may bring actions for damages for certain
violations. In addition, a Customer may be entitled to assert a
violation of these consumer protection laws by way of set-off
against the Customers obligation to pay the outstanding
loan balance.

The National Bank Act, which governs the
activities of national banks, authorizes national banks to use
various alternative interest rates when they make loans,
including the highest interest rate authorized for
state-chartered lenders located in the state where the national
bank is located. This ability to export rates, as
provided for in the Act, is relied upon by the Bank and MBNA
Delaware to charge Customers the interest rates and fees
permitted by Delaware law regardless of an inconsistent law of
the state in which the Customer is located, thereby facilitating
the Banks and MBNA Delawares nationwide lending
activities.

The National Bank Act also permits the banks to
provide debt cancellation and debt suspension products to their
loan customers. In 2002, the OCC adopted new regulations
governing the offering of these products by national banks,
including requirements to provide written disclosures to
consumers and obtain written acknowledgement from consumers of
their receipt of such disclosures.



| |                   
| | ------------------
| | Interstate Banking

The Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 permits bank holding companies, with
Federal Reserve Board approval, to acquire banks located in
states other than the holding companys home state,
generally without regard to whether the transaction is
prohibited under state law. In addition, national and state
banks with different home states are permitted to merge across
state lines, with approval of the appropriate federal banking
agency, unless the home state of a participating bank passed
legislation that expressly prohibits interstate bank mergers.
Also, a bank may establish and operate a de novo branch in a
state in which the bank does not maintain a branch if that state
expressly permits de novo branching.



| |                                                                    
| | -------------------------------------------------------------------
| | Financial Modernization Legislation: The
    Gramm-Leach-Bliley Act

The Gramm-Leach-Bliley Act:



| |   |                                                                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | allows bank holding companies meeting management,
    capital and Community Reinvestment Act standards to engage in a
    substantially broader range of nonbanking activities than are
    otherwise permissible, including insurance underwriting and
    agency, underwriting and dealing in securities, and making
    merchant banking investments in commercial companies;
|
| |  | allows insurers and other financial services
    companies to acquire banks;                                                                                                                                                                                                                                                                                                    
|
| |  | removed various restrictions that previously
    applied to bank holding company ownership of securities firms
    and mutual fund advisory companies; and                                                                                                                                                                                                                      
|
| |  | establishes the overall regulatory structure
    applicable to bank holding companies that also engage in
    insurance and securities operations.                                                                                                                                                                                                                              

In order for a bank holding company to engage in
the broader range of activities that are permitted by the
Gramm-Leach-Bliley Act, all of its depository institutions must
be well capitalized and well managed and it must file a
declaration with the Federal Reserve Board that it elects to be
a financial holding company. In addition, to
commence any new activity permitted by the Gramm-Leach-Bliley
Act and to acquire any company engaged in any new activity
permitted by the Gramm-Leach-Bliley Act, each insured depository
institution of the financial holding company must have received
at least a satisfactory rating in its most recent
examination under the Community Reinvestment Act.

12



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The Gramm-Leach-Bliley Act also allows a national
bank to own a financial subsidiary engaged in certain of the
nonbanking activities authorized for financial holding
companies. The national bank must meet certain requirements,
including that it and all of its depository institution
affiliates be well capitalized and well managed. Also, to
commence any new activity or acquire any company engaged in any
new activity, the national bank must have at least a
satisfactory Community Reinvestment Act examination
rating. In addition, it must obtain approval of the OCC.



| |        
| | -------
| | Privacy

The financial privacy provisions of the
Gramm-Leach-Bliley Act generally prohibit financial
institutions, including the Corporation, from disclosing
nonpublic personal information about consumers to third parties
unless consumers have the opportunity to opt out of
the disclosure. A financial institution is also required to
provide an annual privacy notice to its customers. The
Gramm-Leach-Bliley Act permits states to adopt more restrictive
privacy laws. A number of U.S. states have adopted or are
considering the adoption of more restrictive privacy laws,
including laws prohibiting sharing of customer information
without the customers prior permission and laws
prohibiting financial institutions, including the Corporation,
from disclosing nonpublic personal information about consumers
to affiliates unless consumers have the opportunity to opt
out of the disclosure. These laws may make it more
difficult for the Corporation to share Customer information with
its marketing partners and among its affiliates and reduce the
effectiveness and increase the cost of marketing programs.



| |                           
| | --------------------------
| | Community Reinvestment Act

The Community Reinvestment Act requires banks to
help serve the credit needs of their communities, including
providing credit to low and moderate income individuals and
geographies. Should the Corporations bank subsidiaries
fail to adequately serve the community, potential penalties are
regulatory denials to expand branches, relocate, add
subsidiaries and affiliates, expand into new financial
activities and merge with or purchase other financial
institutions.



| |                         
| | ------------------------
| | Telemarketing Regulation

The Federal Telephone Consumer Protection Act,
among other provisions, requires telemarketers to restrict
calling to certain hours of the day and maintain a list of
individuals asking to be included on that telemarketers
do-not-call list. In January 2003, the Federal
Trade Commission (the FTC) amended the Telemarketing
Sales Rules further restricting telemarketing by establishing
the national do not call list on which consumers may
place themselves and which telemarketers must obtain to exclude
all such consumers from telemarketing calls. In July 2003,
the Federal Communications Commission (the FCC)
amended its implementing regulations under the Telephone
Consumer Protection Act to make them substantially consistent
with the FTCs rules. While the FTCs rules do not
apply to banks, the FCCs rules do. As of January 2004,
nearly 55 million phone numbers were registered on the
national do not call list. Over the past few years,
almost all states have passed or are considering similar
legislation. All of these laws and regulations provide sanctions
for non-compliance and increase the cost and decrease the
efficiency and effectiveness of the Corporations telesales.



| |                
| | ---------------
| | USA PATRIOT Act

In 2001, comprehensive anti-terrorism legislation
known as the USA PATRIOT Act of 2001 (the USA Patriot
Act) was enacted. Title III of the USA Patriot Act
substantially broadened the scope of U.S. anti-money laundering
laws and regulations by imposing significant new compliance and
Customer due diligence obligations, creating new crimes and
penalties and expanding the extra-territorial jurisdiction of
the U.S.

The U.S. Treasury Department has issued a number
of regulations implementing the USA Patriot Act that apply
certain of its requirements to financial institutions, including
the Corporations bank subsidiaries. The regulations impose
new obligations on financial institutions to maintain
appropriate policies, procedures and controls to detect, prevent
and report money laundering and terrorist financing.

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Failure of a financial institution to comply with
the USA Patriot Acts requirements could have serious legal
and reputational consequences for the institution. The USA
Patriot Acts requirement to obtain and verify certain
Customer information may hamper the ability of the Corporation
to open some accounts where such information cannot be easily
obtained or verified.



| |                                     
| | ------------------------------------
| | Regulation of International Business

As with banking and consumer credit regulation in
the U.S., the Corporations international businesses are
subject to extensive regulation.



| |   |                                              
| | - | ---------------------------------------------
| |  | U.S. Regulation of International
    Business

The Corporations investments in MBNA Europe
and MBNA Canada, and any further investments the Corporation may
decide to make in MBNA Europe or MBNA Canada or in any other
company outside the U.S., are subject to regulations adopted by
the Federal Reserve Board pursuant to the BHCA and the Federal
Reserve Act. Among other things, under certain circumstances
these regulations require approval of the Federal Reserve Board
to acquire, establish or make investments in companies outside
the U.S. These regulations could limit the Corporations
ability to expand the business of MBNA Europe or MBNA Canada, as
well as the Corporations ability otherwise to expand its
operations outside the U.S.



| |   |                                            
| | - | -------------------------------------------
| |  | International Regulation of MBNA
    Europe

In the U.K., MBNA Europe is regulated by various
agencies with broad investigatory, supervisory, and enforcement
powers. MBNA Europes primary regulator in the U.K. is the
Financial Services Authority (FSA). The FSA uses a
risk-based supervision methodology.

In order to establish the FSA as the single
statutory body for financial business, the U.K. has enacted the
Financial Services and Markets Act 2000 (FSMA). The
FSMA gives the FSA its legal and regulatory powers and
establishes its framework of control, including with respect to
the conduct of senior management and MBNA Europes business
practices.

Other regulatory bodies in the U.K. are: the
Office of the Information Commissioner, formerly the Data
Protection Commissioner, which enforces the provisions of, and
oversees compliance with, data protection legislation; The
Office of Fair Trading, which grants consumer credit licenses,
enforces the substantive provisions of consumer credit
legislation and regulates fair trade and competition; and the
Office of Telecommunication which oversees compliance with
telecommunications licensing rules and regulations. The
Enterprise Act 2002 gave the U.K. Office of Fair Trading
increased powers to act on consumer complaints.

MBNA Europes business in the U.K. is
subject to numerous laws and regulations. The U.K. Consumer
Credit Act 1974 requires lenders of consumer credit to have a
Consumer Credit License. This Act governs the procedures for
entering into credit card agreements, the provision of
information to customers and the termination of agreements and
imposes joint and several liability on the credit card issuer
and the merchant for breach of contract or misrepresentation in
connection with goods and services purchased with a credit card.

MBNA Europe is subject to increasing levels of
consumer protection regulation in the U.K. The U.K
governments focus on over-indebtedness has resulted in a
Committee of U.K. Members of Parliament (the Treasury Select
Committee) carrying out an investigation into the transparency
of credit card terms (including interest rates, annual
percentage rates, interest calculations, and transaction and
penalty charges), and into marketing methods for credit cards
and products. The Committee made a series of recommendations in
its Report publised in December 2003, some of which are
included in the Consultation Paper on the proposed revision of
the Consumer Credit Act 1974. The recommendations include
changes to advertising regulations, the form and content of
credit card agreements, and the calculation of the annual
percentage rates. If enacted, the recommendations contained in
the Report could have the effect of lowering interest rates on
credit card products and impacting MBNA Europes marketing
efforts. In addition, the European Commission has issued a draft
amended Consumer Credit Directive which is in its consultation
phase. This draft, if adopted, could further regulate the manner
in which MBNA Europe markets and delivers its products.

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Interchange rates in the U.K. have been
challenged recently. Interchange income is a fee paid by a
merchant bank to the card-issuing bank through the interchange
network as a compensation for risk, grace period, and other
operating costs. After a lengthy investigation by U.K.
regulators of MasterCard interchange rates in the U.K., the
regulators issued updated preliminary conclusions on
February 11, 2003, finding that the interchange fee paid by
merchant acquirers to MasterCard card issuers in the U.K. is
anti-competitive and that the agreement between
MasterCards U.K. members for interchange leads to an
unjustifiably high fee being paid to card-issuing banks. A
hearing was held on May 21, 2003. The ruling may be
appealed and the timing of a final ruling is uncertain. Similar
regulatory action could be taken against VISA interchange rates
in the U.K. In 2002, in response to European Union regulatory
action, VISA agreed to reduce its interchange fee on
transactions within the European Union, and in line with this
reduction VISA reduced its interchange fee on transactions in
the U.K. in October 2003. The Corporation cannot predict if
or when interchange rates in the U.K. could be reduced further.
Any potential impact could vary based on business strategies or
other actions the Corporation will take to attempt to limit the
impact.

The Data Protection Act 1998 requires data
controllers to register under this Act and establishes
principles to ensure data is processed fairly and securely, and
gives consumers a right of access to the data held on them.
Similar provisions apply in Ireland and Spain.

The Unfair Contracts Terms Act 1977 and the
Unfair Terms in Consumer Contracts Regulations 1999 prohibit
terms in consumer contracts which are unfair to the consumer and
impose limits on the extent to which civil liability for breach
of contract can be avoided by means of contract terms. In the
U.K., default charges such as late, overlimit and returned check
fees that exceed a genuine pre-estimate of the cost of the
Customers breach of contract are illegal. The Office of
Fair Trading is carrying out an industry wide investigation into
default charges and questioning how the Corporation estimates
default charges.

The personal insolvency provisions of the
Enterprise Act 2002, aimed at reducing the stigma of bankruptcy,
will become effective in April 2004 and could lead to a
rise in the level of bankruptcies in the U.K.

MBNA Europe in the U.K. currently complies with
the Association of British Insurers voluntary regulations
applicable to credit insurance. In January 2005, the FSA
will become the single governmental body that will regulate
insurance and MBNA Europe will be governed by the FSA when
offering credit or other insurance related products to its
Customers. The effect of this regulatory change on MBNA
Europes insurance products will depend on the final
regulations adopted by the FSA.

MBNA Europe has operated in Ireland since 1997
through a branch (MBNA Ireland) established under
the European Union Second Council Directive. Capital and
liquidity requirements are governed by FSA regulation. MBNA
Ireland is otherwise subject to Irish consumer credit laws and
banking laws enforced by the Ireland Financial Services
Regulatory Authority. Increases in, or the introduction of,
finance charges on Customers accounts must be approved by
the Ireland Financial Services Regulatory Authority.

MBNA Europe has operated in Spain since
September 2002 through a branch (MBNA Spain)
established under the European Union Second Council Directive.
Capital and liquidity requirements are governed by FSA
regulations. MBNA Spain is otherwise subject to Spanish consumer
credit and banking laws enforced by the Bank of Spain. New and
increased fees on Customers accounts and advertisements
that refer to the cost of credit must be approved by the Bank of
Spain.



| |   |                                            
| | - | -------------------------------------------
| |  | International Regulation of MBNA
    Canada

MBNA Canada was incorporated by letters patent as
a Schedule II Bank pursuant to the Bank Act (Canada). As is
required by the Bank Act, MBNA Canada obtained an order
permitting it to commence business in November 1997. It is
a wholly owned subsidiary of the Bank and is thus a foreign bank
for the purposes of regulatory supervision in Canada. The
Canadian banking regulatory regime in which MBNA Canada operates
is a comprehensive system based on the provisions of the Bank
Act, the regulations made under the Bank Act and guidelines and
policy statements published by the Office of the Superintendent
of Financial Institutions (Canada) (OSFI). MBNA
Canada is also a member institution of the Canada Deposit
Insurance Corporation.

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##### Table of Contents



The Cost of Borrowing (Banks) Regulations made
pursuant to the Bank Act set out, among other things, the
requirements imposed on MBNA Canada regarding disclosure of
interest charges, the inclusion of certain charges, the cost of
borrowing, and the disclosure of the cost of borrowing.

MBNA Canada is subject to requirements regarding
banking policies, procedures and standards. Among other things,
the Bank Act requires the board of directors of a Canadian bank
to establish investment and lending policies, procedures and
standards. MBNA Canada must adhere to investment and lending
standards that a reasonable and prudent person would apply and
that avoid undue risk of loss and obtain a reasonable return. In
addition, MBNA Canada must maintain adequate capital and
adequate and appropriate forms of liquidity, and must comply
with regulations and OSFI guidelines or policy statements
relating to capital and liquidity requirements.

The Personal Information Protection and
Electronic Documents Act (PIPEDA) establishes a code
of conduct for the collection, use and disclosure of personal
information. The code requires that personal information be
retained, used and disclosed with consent of the individual to
whom it relates, that an individual be given access to his or
her personal information and that the personal information be
accurate. The provisions of PIPEDA are monitored by the Privacy
Commissioner. The Financial Consumer Agency of Canada is
responsible for oversight of consumer protection measures
applicable to federally regulated financial institutions.




Competition

The Corporations business is highly
competitive. The Corporation competes with numerous banks with
national, regional and local operations in domestic and
international markets and with non-bank competitors who issue
credit and charge cards and make other consumer loans.
Strategies used by the Corporations competitors include
targeted marketing, low introductory rates, no annual fee credit
cards, balance transfers with promotional rates, rewards
programs, affinity marketing, and discounts on products and
services. The Corporation also uses these strategies,
emphasizing its strategy of marketing to people with a strong
common interest and its superior Customer service, to
effectively compete with its competitors.




Employees

As of December 31, 2003, the Corporation had
approximately 28,000 employees.




Important Factors Regarding Forward-Looking
Statements

From time to time the Corporation may make
forward-looking oral or written statements concerning the
Corporations future performance. Such statements are
subject to risks and uncertainties that may cause the
Corporations actual performance to differ materially from
that set forth in such forward-looking statements. Words such as
believe, expect, anticipate,
intend or similar expressions are intended to
identify forward-looking statements. Such statements speak only
as of the date on which they are made. The Corporation
undertakes no obligation to update publicly or revise any such
statements. Factors which could cause the Corporations
actual financial and other results to differ materially from
those projected by the Corporation in forward-looking statements
include, but are not limited to, the following:



| |                     
| | --------------------
| | Legal and Regulatory

The banking and consumer credit industry is
subject to extensive regulation and examination. Changes in
federal, state and foreign laws and regulations affecting
banking, consumer credit, bankruptcy, privacy, consumer
protection or other matters could materially impact the
Corporations performance. In recent years, changes in
policies and regulatory guidance issued by banking regulators,
and affecting credit card and consumer lending in particular,
have had a significant impact on the Corporation and are likely
to continue to do so in the future. The Corporation cannot
predict the impact of these changes. The impact of changes in
bank regulatory guidance is particularly difficult to assess as
the guidance in recent years has provided, and is likely to
continue to provide, considerable discretion to bank regulators
in interpreting how the guidance

16



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should be applied generally or to particular
lenders.In addition, the Corporation could incur
unanticipated litigation or compliance costs.




| |            
| | -----------
| | Competition

The Corporations business is highly
competitive. See Competition on page 16 above.
Competition from other lenders could affect the
Corporations loans outstanding, Customer retention, and
the rates and fees charged on the Corporations loans.



| |                    
| | -------------------
| | Economic Conditions

The Corporations business is affected by
general economic conditions beyond the Corporations
control, including employment levels, consumer confidence and
interest rates. A recession or slowdown in the economy of the
U.S. or in other markets in which the Corporation does business
may cause an increase in delinquencies and credit losses and
reduce new account and loan growth and charge volume.



| |                                
| | -------------------------------
| | Delinquencies and Credit Losses

An increase in delinquencies and credit losses
could affect the Corporations financial performance.
Delinquencies and credit losses are influenced by a number of
factors, including the credit quality of the Corporations
credit card and other consumer loans, the composition of the
Corporations loans between credit card and other consumer
loans, general economic conditions, the success of the
Corporations collection efforts, the seasoning of the
Corporations accounts, and the impact of actual or
proposed changes in bankruptcy laws or regulatory policies.



| |                        
| | -----------------------
| | Interest Rate Increases

An increase in interest rates could increase the
Corporations cost of funds and reduce its net interest
margin. The Corporations ability to manage the risk of
interest rate increases in the U.S. and other markets is
dependent on its overall product and funding mix and its ability
to successfully reprice outstanding loans. See Interest
Rate Sensitivity on pages 57 through 58 of the 2003 Annual
Report to Stockholders, which is incorporated herein by
reference, for a discussion of the Corporations efforts to
manage interest rate risk.



| |                                               
| | ----------------------------------------------
| | Availability of Funding and
    Securitization

Changes in the amount, type, and cost of funding
available to the Corporation could affect the Corporations
performance. A major funding alternative for the Corporation is
the securitization of credit card and other consumer loans.
Difficulties or delays in securitizing loans or changes in the
current legal, regulatory, accounting, and tax environment
governing securitizations could adversely affect the
Corporation. See Liquidity and Rate Sensitivity on
pages 52 through 59 of the 2003 Annual Report to Stockholders,
which is incorporated herein by reference, for a discussion of
the Corporations liquidity.



| |                  
| | -----------------
| | Customer Behavior

The acceptance and use of credit card and other
consumer loan products for consumer spending has increased
significantly in recent years. The Corporations
performance could be affected by changes in such acceptance and
use, and overall consumer spending, as well as different
acceptance and use in international markets.



| |                         
| | ------------------------
| | New Products and Markets

The Corporations performance could be
affected by difficulties or delays in the development of new
products or services, including products or services other than
credit card and other consumer loans, and in the expansion into
new international markets. These may include the failure of
Customers to accept products or services when planned, losses
associated with the testing of new products or services, or
financial, legal or other difficulties that may arise in the
course of such implementation. In addition, the Corporation
could face

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competition with new products or services, which
may affect the success of such efforts. With the expansion to
new international markets, the Corporation could experience
difficulties and delays related to legal and regulatory issues,
local custom, competition, and other factors.




| |       
| | ------
| | Growth

The growth of the Corporations existing
business and the development of new products and services will
be dependent upon the ability of the Corporation to continue to
develop the necessary operations, systems, and technology, hire
qualified people, obtain funding for significant capital
investments and selectively pursue loan portfolio acquisitions.




Available Information

The Corporation maintains an Internet website at
www.mbna.com/investor, where the Corporation makes available
free of charge on or through its Internet website, its annual
report of Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and amendments to those
reports filed or furnished pursuant to Section 13(a) or
15(d) of the Securities and Exchange Act of 1934 (the
Exchange Act) as soon as reasonably practicable
after it electronically files such materials with, or furnishes
them to, the Securities and Exchange Commission. In the event
the Corporations Internet website is temporarily
unavailable or the Corporation ceases to provide such
information on or through such website free of charge, the
Corporation will voluntarily provide electronic or paper copies
of its filings free of charge upon request. The
Corporations corporate governance guidelines and the
charters of its Audit Committee, Governance Committee and
Compensation Committee are also available on its Internet
website at www.mbna.com/investor and in print to any stockholder
upon request.






|        |           
|------- | ----------
|ITEM 2. | PROPERTIES

The Corporation has approximately 3,300,000
square feet of administrative offices and credit card facilities
in five office complexes that it owns in Delaware, including the
Corporations headquarters in Wilmington. The majority of
these facilities were designed and built expressly for the
Corporations credit card operations.

MBNA Technology conducts its processing from an
approximately 587,000 square foot facility that the Corporation
owns in Dallas, Texas as well as from approximately 548,000
square feet of office space at the facilities owned by the
Corporation in Newark, Delaware. MBNA Technology is in the
process of renovating a recently purchased 108,000 square foot
building located in Richardson, Texas. The building will be used
as a backup data center.

MBNA Marketing Systems has its headquarters in
Camden, Maine, and regional offices in the following locations:
Belfast, Maine; Cleveland, Ohio; Dallas, Texas (part of MBNA
Technologys facility); Kennesaw, Georgia; Hunt Valley,
Maryland; Aliso Viejo, California; Newark, New Jersey; and New
York City, New York. These facilities are owned by the
Corporation, except for the leased New York City and Aliso Viejo
offices.

MBNA Marketing Systems has telesales and other
facilities in Delaware, New Hampshire, Ohio, Pennsylvania and in
several locations in Maine. Most of these facilities are owned
by the Corporation.

MBNA Europe has approximately 392,000 square feet
of administrative offices and credit card facilities that it
owns in Chester, England. MBNA Europe is currently constructing
an additional 107,000 square feet of space to support ongoing
expansion. It has leased sales offices in London, England and it
conducts operations in Ireland from owned facilities in Dublin,
Ireland. In Madrid, Spain MBNA Europe operates out of 100,000
square feet of leased space. MBNA Ireland Limited owns a 121,000
square foot operations center in Carrick-on-Shannon, Ireland.

MBNA Canada has approximately 200,000 square feet
of owned office space for its credit card operations in Ottawa,
Ontario and 5,000 square feet of leased space in Montreal,
Quebec.

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|        |                  
|------- | -----------------
|ITEM 3. | LEGAL PROCEEDINGS



| |                                                
| | -----------------------------------------------
| | Foreign Currency Conversion Fees
    Litigation

MasterCard International Incorporated
(MasterCard) and Visa U.S.A., Inc.
(Visa) charge credit and debit cardholders a 1% fee
on transactions in foreign currencies for conversion of the
foreign currency into U.S. dollars. They require the
Corporations banking subsidiaries and other member banks
to disclose the fee in their cardholder agreements and to bill
and collect the fee from cardholders. In Schwartz v. Visa and
MasterCard, filed in February 2000 in the California
Superior Court, the plaintiff claims that the 1% fee is not
adequately disclosed under federal and California law. The
plaintiffs are seeking unspecified monetary damages and
injunctive relief. The trial court issued a decision holding
that the federal disclosure requirement is not applicable but
that the failure to disclose the fee on each statement that
includes a fee is unfair under California law. The court held a
hearing on restitution of the fees to cardholders. Visa and
MasterCard have announced their intention to appeal the final
decision. The Corporation is not a party to the Schwartzcase and should have no direct potential liability in the
matter. However, a large monetary judgment against MasterCard or
Visa could indirectly affect the Corporation and other issuers.
The plaintiffs or MasterCard and Visa or their creditors may
seek to assess or otherwise assert claims against members of
MasterCard and Visa, including the Corporations banking
subsidiaries, to satisfy the judgment. Even if no claim is
asserted against member banks, the impact of a judgment against
MasterCard and Visa could adversely affect the business of the
Corporations banking subsidiaries. The Corporation cannot
determine at this time the outcome of this matter, the amount of
any possible judgments against MasterCard and Visa, or the
likelihood, amount or validity of any claims against the member
banks resulting from these suits.

Unlike most other issuers, in the United States
the Corporations banking subsidiaries do not charge a
foreign currency conversion fee on consumer credit cards in
addition to the fee charged by MasterCard and Visa. A number of
other class actions are pending against other issuers claiming
that these additional foreign currency conversion fees are not
properly disclosed by those issuers as finance charges on the
cardholder statement under Regulation Z. The Corporation is
not a party to these suits.

The Corporation and the Bank are among the many
card issuers who are defendants in In Re Currency Conversion
Fee Antitrust Litigation, a purported class action, filed
against the Corporation and the Bank in January 2002 in the
U.S. District Court for the Southern District of New York. The
plaintiffs, none of whom are the Corporations or the
Banks Customers, claim that the defendants conspired in
violation of the antitrust laws to charge foreign currency
conversion fees and to conceal the fees by not disclosing them
on cardholder statements, in violation of the Truth-in-Lending
Act. The plaintiffs claim that the bank defendants and
MasterCard and Visa conspired to charge the 1% foreign currency
conversion fee assessed by MasterCard and Visa. The plaintiffs
are seeking unspecified monetary damages and injunctive relief.
In July 2003, the court recently granted a motion to dismiss
certain Truth-in-Lending Act claims against the Corporation and
other defendants, but denied a motion to dismiss the antitrust
claims against the defendants. The Corporation and the Bank
intend to file a motion for summary judgment after discovery.
The Corporation and the Bank intend to defend this matter
vigorously and believe that the claim is without merit.

The Corporation, the Bank and their affiliates
are commonly subject to various pending or threatened legal
proceedings, including certain class actions, arising out of the
normal course of business. In view of the inherent difficulty of
predicting the outcome of such matters, the Corporation cannot
state what the eventual outcome of these matters will be.
However, the Corporation believes, based on current knowledge
and after consultation with counsel, that the outcome of such
matters will not have a material adverse effect on the
Corporations consolidated financial condition or results
of operations.






|        |                                                        
|------- | -------------------------------------------------------
|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY
    HOLDERS

During the fourth quarter of 2003, no matters
were submitted to a vote of security holders of the Corporation.



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EXECUTIVE OFFICERS OF THE REGISTRANT


Information concerning the Corporations
executive officers is set forth below.

Randolph D. Lerner (42) has been Chairman of
the Corporation since November 2002. He has been a director
of the Corporation and the Bank since April 1993. He is the
owner and Chairman of the Cleveland Browns football team. He was
previously a partner in Securities Advisors, L.P., which he had
managed since September 1991. He is on the Board of
Trustees of the New York Academy of Art, and a member of the
Board of Trustees of the Hospital for Special Surgery in New
York City. He is a member of the District of Columbia and New
York Bar Associations.

Bruce L. Hammonds (55) has been President and
Chief Executive Officer of the Corporation and a director of the
Corporation since December 30, 2003. He most recently
served as Chairman and Chief Executive Officer of the Bank. He
previously served as Chief Operating Officer of the Bank and has
been a director of the Bank since 1986. He has 34 years of
management experience in consumer lending and was a member of
the management team that established the Bank in 1982.

John R. Cochran III (52) is an Executive Vice
Chairman of the Corporation and is the Chairman, Chief Executive
Officer and President of the Bank. He previously served as the
Chief Operating Officer and Chief Marketing Officer of the Bank.
He has 31 years of management experience in the financial
services industry and was a member of the management team that
established the Bank in 1982. He has been a director of the Bank
since 1986.

Richard K. Struthers (48) is a Vice Chairman
of the Corporation and a Senior Executive Vice Chairman of the
Bank. He also serves as Chief Loan Officer of the Bank. He is
responsible for international operations, consumer finance,
portfolio acquisitions, and the Banks new American Express
credit card program. He has 26 years of experience in
consumer lending and was a member of the management team that
established the Bank in 1982.

Lance L. Weaver (49) is a Vice Chairman of
the Corporation and a Senior Executive Vice Chairman of the
Bank. He is responsible for the Banks U.S. credit card
business, including business development marketing, sales,
Customer satisfaction, U.S. regional operations, credit,
customer assistance, and fraud. He previously served as the
Chief Administrative Officer of the Bank. He is a board member
and former chairman of MasterCard International Inc. He has
29 years of experience in consumer lending and
administration and has been with the Corporation for
13 years. He has been a director of the Bank since 1993.

Gregg Bacchieri (48) is an Executive Vice
Chairman of the Bank. He oversees U.S. Business Operations,
which includes credit, customer assistance, U.S. credit card
operations, and Customer satisfaction. He is a member of the
MasterCard International Operations Committee. He has 26 years
of management experience in consumer lending and was a member of
the management team that established the Bank in 1982.

Frank P. Bramble Sr. (55) is a Vice Chairman of
the Corporation and an Executive Vice Chairman of the Bank. He
is responsible for strategic planning, expense management,
resource allocation, research and development, process
reengineering, procurement, the Office of the Customer Advocate,
communications, and the MBNA Foundation. Before joining the
Corporation in 2002, he served as chairman of Allfirst and chief
executive, USA Division, for AIB Group, Allfirsts parent
company. He previously held senior positions with NationsBank
Maryland. He also served as Chief Executive Officer of Maryland
National Bank and MNC Financial Inc., where he assisted in the
Corporations initial public offering in 1991. He has 36
years of management experience in the financial services
industry.

Douglas R. Denton (57) is a Vice
Chairman of the Corporation and a Senior Vice Chairman of the
Bank. He also serves as Chief Technology Officer of the Bank. He
is responsible for data processing, payment processing,
statement rendering, card production and network services. His
35 year career has included a broad range of experience
within the financial services industry and he has been with the
Corporation for 13 years.

Louis J. Freeh (54) is the General Counsel for
the Corporation and the Bank. He is responsible for legal
matters and government affairs. He also serves as the Ethics
Officer of the Bank. Prior to joining the

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Corporation in 2001, he served as director of the
FBI for eight years, as a federal judge and as a federal
prosecutor.


Charles C. Krulak (62) is a Vice Chairman of the
Corporation and a Senior Vice Chairman of the Bank. He has been
named Chief Administrative Officer of the Bank, effective April
1, 2004. He will have responsibility for corporate affairs,
administrative services, personnel, facility management,
education and career development, legal, control, and
compliance. He most recently served as Chief Executive Officer
of MBNA Europe. Before joining the Corporation in 1999, General
Krulak had a 35 year career in the U.S. Marine Corps, including
serving four years as Commandant.

Michael G. Rhodes (38) is an Executive Vice
Chairman of the Bank. He oversees U.S. credit card marketing and
business development. He was on the Board of the U.S. region of
MasterCard International Inc. in 2002 and served as Chairman of
the Board in 2000 and 2001. He has 13 years of experience in the
financial services industry and has been with the Corporation
for 11 years.

John W. Scheflen (57) is a Senior Vice Chairman
of the Bank. He serves as Secretary of the Corporation and the
Bank. He also serves as the Chief Risk Officer of the Bank. He
previously served as Chief Counsel of the Corporation. He is
responsible for corporate governance, compliance, control, and
information security. He assisted with the legal aspects of the
Corporations initial public offering in 1991. He has 29
years experience in law and has been with the Corporation for 12
years.

Kenneth A. Vecchione (49) is a Vice Chairman of
the Corporation and a Senior Vice Chairman of the Bank. He also
serves as Chief Financial Officer and Chief Accounting Officer
of the Bank. He previously served as Chief Financial Officer at
AT&T Universal Card Services, First Data Corporations
Electronic Funds Management business, and Citicorps Credit
Card business. He has 27 years experience in the financial
services industry and he has been with the Corporation for 6
years.

Vernon H. C. Wright (61) is the Chief Financial
Officer and Chief Accounting Officer of the Corporation. He is
also an Executive Vice Chairman of the Bank. He is responsible
for the Corporations finance areas, including accounting
and tax, as well as foreign and domestic treasury activities,
including structured products, investment portfolios, and
interbank funding. He is also responsible for all global capital
markets and corporate finance activities. He has more than 35
years of experience in consumer and corporate banking and has
been with the Corporation and its predecessor companies for 35
years. He has been a director of the Bank since 1992.




PART II






|        |                                                                              
|------- | -----------------------------------------------------------------------------
|ITEM 5. | MARKET FOR THE REGISTRANTS COMMON EQUITY
    AND RELATED STOCKHOLDER MATTERS

Common Stock Price Range and
Dividends on page 103 and Dividend Limitations
on pages 45 and 46 of the 2003 Annual Report to
Stockholders are incorporated herein by reference.
Securities Authorized for Issuance Under Equity
Compensation Plans on page 21 of the Definitive Proxy
Statement is incorporated herein by reference.






|        |                        
|------- | -----------------------
|ITEM 6. | SELECTED FINANCIAL DATA

Five-Year Statistical Summary on
pages 12 and 13 of the 2003 Annual Report to Stockholders is
incorporated herein by reference.






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Managements Discussion and Analysis
of Financial Condition and Results of Operations on pages
14 through 61 of the 2003 Annual Report to Stockholders is
incorporated herein by reference.

21



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##### Table of Contents








|         |                                                               
|-------- | --------------------------------------------------------------
|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK

Interest Rate Sensitivity on pages 57
through 58 and Foreign Currency Exchange Rate
Sensitivity on pages 58 through 59 of the 2003 Annual
Report to Stockholders are incorporated herein by reference.






|        |                                                
|------- | -----------------------------------------------
|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY
    DATA

The Report of Independent Auditors,
the Consolidated Financial Statements and Notes to the
Consolidated Financial Statements, and the Quarterly
Data on pages 63 through 102 of the 2003 Annual Report to
Stockholders are incorporated herein by reference.






|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
    ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.






|         |                        
|-------- | -----------------------
|ITEM 9A. | CONTROLS AND PROCEDURES

The Corporations management (including the
Chief Executive Officer and the Chief Financial Officer)
conducted an evaluation of the Corporations disclosure
controls and procedures (as such term is defined in
Rule 13a-15 (e) under the Securities Exchange Act of 1934
(the Exchange Act)) as of the last day of the period
covered by this report as required by Rule 13a-15(b) under
the Exchange Act. Based on such evaluation, the
Corporations Chief Executive Officer and Chief Financial
Officer concluded as of the last day of the period covered by
this report that the Corporations disclosure controls and
procedures were effective in alerting them on a timely basis to
material information required to be included in the
Corporations reports filed or submitted under the Exchange
Act, particularly during the period in which this quarterly
report was being prepared.

There was no change in the Corporations
internal control over financial reporting that occurred during
the fourth fiscal quarter of 2003 that has materially affected,
or is reasonably likely to materially affect, the
Corporations internal control over financial reporting.




PART III






|         |                                                       
|-------- | ------------------------------------------------------
|ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE
    REGISTRANT

Election of Directors on pages 5
through 6, the fifth paragraph of Board of Directors
on page 7, Code of Ethics on page 11 and
Section 16(a) Beneficial Ownership Reporting
Compliance on page 34 in the Definitive Proxy
Statement are incorporated herein by reference.






|         |                       
|-------- | ----------------------
|ITEM 11. | EXECUTIVE COMPENSATION

Compensation of Directors on pages 9
and 10, Compensation Committee Report on Executive
Compensation on pages 14 through 17, Compensation
Committee Interlocks and Insider Participation on page 18,
Executive Compensation on pages 18 through 24, and
Stock Performance Graph on page 25 in the Definitive
Proxy Statement are incorporated herein by reference.






|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
    OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Security Ownership of Management and
Certain Beneficial Owners on pages 3 and 4 in the
Definitive Proxy Statement and Securities Authorized for
Issuance Under Equity Compensation Plans on page 21 in the
Definitive Proxy Statement are incorporated herein by reference.

22



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##### Table of Contents








|         |                                                   
|-------- | --------------------------------------------------
|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED
    TRANSACTIONS

Compensation Committee Interlocks and
Insider Participation on page 18 and Certain
Relationships on pages 26 through 27 in the Definitive
Proxy Statement are incorporated herein by reference.






|         |                                           
|-------- | ------------------------------------------
|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND
    SERVICES

Independent Auditors on pages 28
through 30 (other than the sub-sections thereof titled
Policy on Employment of Personnel of Independent
Auditors and Policy on Engagement of Independent
Auditors for Personal Services by Audit Committee Members and
Executive Officers) in the Definitive Proxy Statement is
incorporated herein by reference.




PART IV






|         |                                                                     
|-------- | --------------------------------------------------------------------
|ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
    REPORTS ON FORM 8-K

1.     The following are
incorporated herein by reference from the pages designated in
the 2003 Annual Report to Stockholders:

|                                                                                                                        |  |      |        | 
|----------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | 
|                                                                                                                        |  | Page
|                                                                                                                        |  |     
|Report of Independent Auditors                                                                                          |  |      | 63     | 
|Consolidated Statements of Financial Condition,
    December 31, 2003 and 2002                                          |  |      | 64     | 
|Consolidated Statements of Income for the years
    ended December 31, 2003, 2002 and 2001                              |  |      | 65     | 
|Consolidated Statements of Changes in
    Stockholders Equity for the years ended December 31,
    2003, 2002 and 2001 |  |      | 66     | 
|Consolidated Statements of Cash Flows for the
    years ended December 31, 2003, 2002 and 2001                          |  |      | 67     | 
|Notes to the Consolidated
    Financial Statements                                                                      |  |      | 68-101 | 

2.     Financial
Statement Schedules

No Financial Statement Schedules are required to
be filed.

3.     Exhibits:

The following exhibits are incorporated by
reference or filed herewith. References to the 1990
Form S-1 are to the Registrants Registration
Statement on Form S-1 effective January 22, 1991,
Registration No. 33-38125. References to the 1997
Form S-4 are to Amendment No. 1 of the
Registrants Registration Statement on Form S-4,
Registration No. 333-21181, filed on February 25,
1997. References to the 1991 Form 10-K, the 1992
Form 10-K, the 1993 Form 10-K, the 1994
Form 10-K, the 1995 Form 10-K, the 1996
Form 10-K, the 1997 Form 10-K, the 1998
Form 10-K, the 1999 Form 10-K, the 2000
Form 10-K, the 2001 Form 10-K and the 2002
Form 10-K are to the Registrants Annual Reports on
Form 10-K for the years ended December 31, 1991, 1992,
1993, 1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001 and 2002,
respectively.

|             |  |                                                                                                                                                             
|------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 3.1  |  | Articles of Incorporation, as amended and
    supplemented (incorporated by reference to Exhibit 3.1 of Form
    10-Q for the quarter ended March 31, 1998).
|Exhibit 3.2  |  | Bylaws, as amended (incorporated by reference to
    Exhibit 3.2 of 2002 Form 10-K).                                                                        
|Exhibit 4.1* |  | Senior Indenture, dated as of September 29, 1992,
    between the Registrant and Bankers Trust Company, as Trustee.                                         
|Exhibit 4.2* |  | Subordinated Indenture, dated as of November 24,
    1992, between the Registrant and Harris Trust and Savings Bank,
    as Trustee.                        

23



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##### Table of Contents



|             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 4.3* |  | Issuing and Paying Agency Agreement, dated as of
    December 10, 1991, and amended as of August 11, 1993, December
    21, 1994 and May 6, 1996 between MBNA America Bank, N.A. and
    First Trust of New York, National Association.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Exhibit 4.4  |  | Junior Subordinated Indenture, dated as of
    December 18, 1996, between the Registrant and The Bank of New
    York as Debenture Trustee (incorporated by reference to Exhibit
    4 (c) of 1997 Form S-4), as supplemented by the First
    Supplemental Indenture, dated as of June 27, 2002 (incorporated
    by reference to Exhibit 4.2 to the Current Report on Form 8-K
    filed on June 26, 2002) and by the Second Supplemental
    Indenture, dated as of November 27, 2002 (incorporated by
    reference to Exhibit 4.2 to the Current Report on Form 8-K filed
    on November 26, 2002).                                                                                                                               
|Exhibit 4.5  |  | Amended and Restated Trust Agreement, dated as of
    December 18, 1996, between the Registrant and The Bank of New
    York (incorporated by reference to Exhibit 4.6 of 1996 Form
    10-K).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Exhibit 4.6  |  | Guarantee Agreement, dated as of December 18,
    1996, between the Registrant and The Bank of New York
    (incorporated by Reference to Exhibit 4.7 of 1996 Form 10-K).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Exhibit 4.7  |  | Amended and Restated Trust Agreement, dated as of
    January 23, 1997, between the Registrant and The Bank of New
    York (incorporated by reference to Exhibit 4.8 of 1996 Form
    10-K).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Exhibit 4.8  |  | Guarantee Agreement, dated as of January 23,
    1997, between the Registrant and The Bank of New York
    (incorporated by Reference to Exhibit 4.9 of 1996 Form 10-K).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Exhibit 4.9  |  | Amended and Restated Trust Agreement, dated as of
    March 31, 1997, between the Registrant and The Bank of New York
    (incorporated by reference to Exhibit 4.10 of 2001 Form 10-K).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Exhibit 4.10 |  | Guarantee Agreement, dated as of March 31, 1997,
    between the Registrant and The Bank of New York (incorporated by
    Reference to Exhibit 4.11 of 1997 Form 10-K).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Exhibit 4.11 |  | Amended and Restated Trust Agreement, dated as of
    June 27, 2002, between the Registrant and The Bank of New York
    (incorporated by reference to Exhibit 4.1 to the Current Report
    on Form 8-K filed on June 26, 2002).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Exhibit 4.12 |  | Guarantee Agreement, dated as of June 27, 2002,
    between the Registrant and The Bank of New York (incorporated by
    reference to Exhibit 4.12 of 2002 Form 10-K).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Exhibit 4.13 |  | Amended and Restated Trust Agreement, dated as of
    November 27, 2002, between the Registrant and The Bank of New
    York (incorporated by reference to Exhibit 4.1 to the Current
    Report on Form 8-K filed on November 26, 2002).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Exhibit 4.14 |  | Guarantee Agreement, dated as of November 27,
    2002, between the Registrant and The Bank of New York
    (incorporated by reference to Exhibit 4.14 of 2002 Form 10-K).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Exhibit 4.15 |  | The Agency Agreement, dated as of July 17, 1997
    (incorporated by reference to Exhibit 4.12 of 1999 Form 10-K),
    as amended by Amendment No. 1, dated as of April 10,
    2001(incorporated by reference to Exhibit 4.12 of 2000 Form
    10-K), and as further amended by Amendment No. 2, dated as of
    April 10, 2002 (incorporated by reference to Exhibit 4.15 of
    2002 Form 10-K), among MBNA America Bank, N.A., Bank One Trust
    Company, N.A., as global agent, Bank One, N.A., London Branch,
    as London paying agent and London Issuing agent, Bank One Trust
    Company, N.A., as registrar and New York paying agent, and
    Credit Agricole Indosuez, as Transfer agent and Luxembourg
    paying agent.

24



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|                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 4.16    |  | The Fourth Supplemental Trust Deed, dated
    May 8, 2003 (the Fourth Supplement), attaching
    the Trust Deed, dated May 7, 1999 as amended by the First
    Supplemental Trust Deed, dated May 8, 2000, the Second
    Supplemental Trust Deed, dated May 4, 2001, the Third
    Supplemental Trust Deed, dated May 8, 2002, and the Fourth
    Supplement, each among MBNA Europe Funding PLC, MBNA America
    Bank, N.A. and Deutsche Trustee Company Limited (formerly
    Bankers Trustee Company Limited).
|Exhibit 10.1    |  | License Agreement with MasterCard (incorporated
    by reference to Exhibit 10.3 of 1990 Form S-1).                                                                                                                                                                                                                                                                                                                                                                                                                  
|Exhibit 10.2    |  | License Agreement with VISA (incorporated by
    reference to Exhibit 10.4 of 1990 Form S-1).                                                                                                                                                                                                                                                                                                                                                                                                                        
|Exhibit 10.3    |  | Share Purchase Agreement with Alfred Lerner
    (including Registration Rights Agreement) (incorporated by
    reference to Exhibit 10.10 of 1990 Form S-1).                                                                                                                                                                                                                                                                                                                                                         
|Exhibit 10.4    |  | Stock Purchase Agreement, dated as of August 15,
    2003, between the Registrant and Norma Lerner, Randolph Lerner
    and Nancy Beck, as co-Executors of the Estate of Alfred Lerner
    (incorporated by reference to Exhibit 10 to the Current Report
    on Form 8-K filed on August 19, 2003).                                                                                                                                                                                                                 
|Exhibit 10.5    |  | Senior Syndicated Revolving Credit Facility
    Agreement, dated July 18, 2003 (incorporated by reference to
    Exhibit 10.1 of Form 10-Q for the quarter ended June 30,
    2003).                                                                                                                                                                                                                                                                                                                                 
|Exhibit 10.6    |  | Multicurrency Revolving Credit and Sterling
    Acceptance Facility Agreement dated as of June 5, 2000, among
    MBNA International Bank Limited, certain lenders and Lloyds Bank
    PLC as Agent (incorporated by reference to Exhibit 10.5 of 2000
    Form 10-K).                                                                                                                                                                                                                                               
|Exhibit 10.7**  |  | Form of Executive Non-Compete Agreement
    (incorporated by reference to Exhibit 10 of Form 10-Q for the
    quarter ended September 30, 1999) and a schedule (filed
    herewith) setting forth additional information with respect to
    such agreement.                                                                                                                                                                                                                                                         
|Exhibit 10.8**  |  | 1991 Long Term Incentive Plan, as amended
    (incorporated by reference to Exhibit 10.3 of Form 10-Q for the
    quarter ended March 31, 1997 and Exhibit 10.8 of 1995 Form
    10-K), and forms of Stock Option Agreements (1993 agreement
    incorporated by reference to Exhibit 10.12 of 1993 Form 10-K and
    1995 agreements incorporated by reference to Exhibit 10.8 of
    1995 Form 10-K).                                                                                                              
|Exhibit 10.9**  |  | 1997 Long Term Incentive Plan, as amended
    (incorporated by reference to Exhibit 10 of Form 10-Q for the
    quarter ended September 30, 2002) and form of Stock Option Grant
    (incorporated by reference to Exhibit 10.9 of 1997 Form 10-K).                                                                                                                                                                                                                                                                  
|Exhibit 10.10** |  | MBNA Corporations 1997 Long Term Incentive
    Plan Policies (incorporated by reference to Exhibit 10.5 of Form
    10-Q for the quarter ended June 30, 2003).                                                                                                                                                                                                                                                                                                                                                      
|Exhibit 10.11** |  | Form of Restricted Stock Agreement (incorporated
    by reference to Exhibit 10.9 of 1995 Form 10-K).                                                                                                                                                                                                                                                                                                                                                                                                                
|Exhibit 10.12** |  | Restricted Stock Agreement, dated as of March 8,
    2000 (incorporated by reference to Exhibit 10.3 of Form 10-Q for
    the quarter ended March 31, 2000).                                                                                                                                                                                                                                                                                                                                                         
|Exhibit 10.13** |  | MBNA Corporation Supplemental Executive
    Retirement Plan, as Amended and Restated effective July 1, 2003
    (incorporated by reference to Exhibit 10.4 of Form 10-Q for the
    quarter ended June 30, 2003).                                                                                                                                                                                                                                                                                                    
|Exhibit 10.14** |  | Assumed Deferred Compensation Plans (1989
    Deferred Compensation Plan incorporated by reference to Exhibit
    10.12 of 1991 Form 10-K and 1988 Deferred Compensation Plan
    Incorporated by reference to Exhibit 10.14 of 1993 Form 10-K).                                                                                                                                                                                                                                                                     
|Exhibit 10.15** |  | MBNA Corporation Senior Executive Performance
    Plan (incorporated by reference to Exhibit 10 of Form 10-Q for
    the quarter ended March 31, 2001).                                                                                                                                                                                                                                                                                                                                                              

25



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|                |  |                                                                                                                                                                                                                                                                                                                                                                                      
|--------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 10.16** |  | Deferred Compensation Plan and form of Agreement,
    as amended and restated effective April 1, 1995 (incorporated by
    Reference to Exhibit 10.16 of 1994 Form 10-K).                                                                                                                                                                                                            
|Exhibit 10.17** |  | Amended and Restated Employment and Retirement
    Agreement, dated as of December 12, 2003, between the Registrant
    and Charles M. Cawley.                                                                                                                                                                                                                                       
|Exhibit 10.18** |  | Agreement dated December 15, 2002 between the
    Registrant and Norma Lerner (incorporated by reference to
    Exhibit 10.17 of 2002 Form 10-K).                                                                                                                                                                                                                                    
|Exhibit 10.19** |  | Supplemental Executive Insurance Plan
    (incorporated by reference to Exhibit 10.1 of Form 10-Q for the
    quarter ended September 30, 2003).                                                                                                                                                                                                                                     
|Exhibit 10.20** |  | Change of Control Agreement, dated as of July
    2003, by and between MBNA Corporation, MBNA America Bank, N.A.
    and certain executive officers of MBNA Corporation (incorporated
    by reference to Exhibit 10.2 of Form 10-Q for the quarter ended
    June 30, 2003).                                                                                                        
|Exhibit 10.21** |  | Change of Control Agreement, dated as of July
    2003, by and between MBNA Corporation, MBNA America Bank, N.A.
    and certain executive officers of MBNA Corporation (incorporated
    by reference to Exhibit 10.3 of Form 10-Q for the quarter ended
    June 30, 2003) and a schedule (filed herewith) setting forth
    additional information with respect to such agreement.
|Exhibit 12      |  | Computation of Ratio of Earnings to Combined
    Fixed Charges and Preferred Stock Dividend Requirements.                                                                                                                                                                                                                                                                            
|Exhibit 13      |  | 2003 Annual Report to Stockholders.                                                                                                                                                                                                                                                                                                                                                  
|Exhibit 21      |  | Subsidiaries of the Corporation.                                                                                                                                                                                                                                                                                                                                                     
|Exhibit 23      |  | Consent of Independent Auditors.                                                                                                                                                                                                                                                                                                                                                     
|Exhibit 31.1    |  | Section 302 Chief Executive Officer Certification.                                                                                                                                                                                                                                                                                                                                   
|Exhibit 31.2    |  | Section 302 Chief Financial Officer Certification.                                                                                                                                                                                                                                                                                                                                   
|Exhibit 32.1    |  | Section 906 Chief Executive Officer Certification.                                                                                                                                                                                                                                                                                                                                   
|Exhibit 32.2    |  | Section 906 Chief Financial Officer Certification.                                                                                                                                                                                                                                                                                                                                   



---



|  |                                                                                                  
|- | -------------------------------------------------------------------------------------------------
|* | The Registrant agrees to furnish a copy to the
    Securities and Exchange Commission on request.



|   |                                                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------
|** | Management contract or compensatory plan or
    arrangement required to be filed as an Exhibit pursuant to
    Item 15(c) of Form 10-K.

4.     Reports on
Form 8-K



| |                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. Report dated October 2, 2003,
    reporting the securitization of CAD$500.0 million of credit
    card loan receivables by MBNA Canada Bank.                                             
|
| | 2. Report dated October 2, 2003,
    reporting the securitization of $150.0 million of credit
    card loan receivables by MBNA America Bank, N.A.                                          
|
| | 3. Report dated October 15, 2003,
    reporting the securitization of $500.0 million of credit
    card loan receivables by MBNA America Bank, N.A.                                         
|
| | 4. Report dated October 16, 2003,
    reporting MBNA Corporations earnings release for the third
    quarter of 2003.                                                                      
|
| | 5. Report dated October 31, 2003,
    reporting the net credit losses and loan delinquency ratios for
    MBNA Corporation, for its loan receivables and managed loans for
    October 2003.
|
| | 6. Report dated November 5, 2003,
    reporting the securitization of $100.0 million of credit
    card loan receivables by MBNA America Bank N.A.                                          
|
| | 7. Report dated November 6, 2003,
    reporting the securitization of
    706.0 million
    of credit card loan receivables by MBNA Europe Bank Limited.                                   

26



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| |                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 8. Report dated November 6, 2003,
    reporting the securitization of $500.0 million of credit
    card loan receivables by MBNA America Bank, N.A.                                            
|
| | 9. Report dated November 30,
    2003, reporting the net credit losses and loan delinquency
    ratios for MBNA Corporation, for its loan receivables and
    managed loans for November 2003. 
|
| | 10. Report dated December 18, 2003,
    reporting the securitization of $500.0 million of credit card
    loan receivables by MBNA America Bank, N.A.                                          
|
| | 11. Report dated December 31, 2003,
    reporting the net credit losses and loan delinquency ratios for
    MBNA Corporation, for its loan receivables and managed loans for
    December 2003.
|
| | 12. Report dated January 22, 2004,
    reporting MBNA Corporations earnings release for the
    fourth quarter of 2003.                                                                       
|
| | 13. Report dated January 31, 2004,
    reporting the net credit losses and loan delinquency ratios for
    MBNA Corporation, for its loan receivables and managed loans for
    January 2004.  
|
| | 14. Report dated February 25, 2004,
    reporting the securitization of $600.0 million of credit
    card loan receivables by MBNA America Bank, N.A.                                          

27



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



| |                 
| | ----------------
| | MBNA CORPORATION



| |     |                     
| | --- | --------------------
| | By: | /s/BRUCE L. HAMMONDS

| |                        
| | -----------------------
| |                        
| | Bruce L. Hammonds      
| | Chief Executive Officer

March 15, 2004

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the
capacities and on the dates indicated.

|                                                     |  |                                                                                   |  |               
|---------------------------------------------------- |  | --------------------------------------------------------------------------------- |  | --------------
|Signature                                            |  | Title                                                                             |  | Date          
|                                                     |  |                                                                                   |  |               
|                                                    
|/s/ BRUCE L. HAMMONDSBruce L. Hammonds               |  | President, Chief Executive Officer and
    Director (principal executive officer) |  | March 15, 2004
|                                                    
|/s/ VERNON H.C. WRIGHTVernon H.C. Wright             |  | Chief Financial Officer (principal financial and
    accounting officer)          |  | March 15, 2004
|                                                    
|/s/ JAMES H. BERICKJames H. Berick, Esq.             |  | Director                                                                          |  | March 15, 2004
|                                                    
|/s/ BENJAMIN R. CIVILETTIBenjamin R. Civiletti, Esq. |  | Director                                                                          |  | March 15, 2004
|                                                    
|/s/ WILLIAM L. JEWSWilliam L. Jews                   |  | Director                                                                          |  | March 15, 2004
|                                                    
|/s/ NORMA LERNERNorma Lerner                         |  | Director                                                                          |  | March 15, 2004
|                                                    
|/s/ RANDOLPH D. LERNERRandolph D. Lerner, Esq.       |  | Chairman and Director                                                             |  | March 15, 2004
|                                                    
|/s/ STUART L. MARKOWITZStuart L. Markowitz, M.D.     |  | Director                                                                          |  | March 15, 2004
|                                                    
|/s/ WILLIAM B. MILSTEADWilliam B. Milstead           |  | Director                                                                          |  | March 15, 2004
|                                                    
|/s/ MICHAEL ROSENTHALMichael Rosenthal, Ph.D.        |  | Director                                                                          |  | March 15, 2004

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