SEC Clears the Way for HSBC-Metris Merger

The way has been cleared for the acquisition of Metris Companies by HSBC. HSBC said the merger would be dependent on Metris resolving its issues with the SEC. The Midwest Regional Office of the SEC informed Metris that it does not intend to recommend that the SEC bring an enforcement action against Metris with respect to its pending investigation. The SEC investigation, first disclosed by Metris in August 2003, concerns the company’s reporting and treatment of allowance for loan losses for 2001 and its valuation of retained interests in securitized loans. In August, Metris received a “Wells Notice” from the SEC covering the CEO and its controller. HSBC says the recent SEC statement has satisfied the conditions of the sale. Metris stockholders are expected to approve the merger tomorrow and it will likely close on December 1st. In August, HSBC Finance announced it was buying Metris Companies for about $1.6 billion in cash. (CF Library 7/13/05; 8/4/05)

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88% of Consumers Want Open-Loop Gift Cards

A new poll shows that 79% of those surveyed would rather receive a $100 prepaid gift card than a more traditional gift worth the same value. The MasterCard survey, conducted by KRC Research, also showed that 88% would rather purchase an open-loop prepaid gift card than a retailer-issued card. More than 80% said prepaid cards avoided the unwanted gift problem. About 83% said they would be somewhat or much more likely to stay within their budget if they were shopping for a prepaid card. Nearly 60% indicated that avoiding the time-consuming practices of holiday shopping and gift-wrapping would influence their decision to purchase a prepaid gift card. Additionally, the poll found that 63% of people who receive an open-loop gift card are likely to spend it at the mall as opposed to a grocery store or gas station.

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SAVVIS CEO Loses Job Over an AmEx Card Lawsuit

The Chairman and CEO of St. Louis-based SAVVIS has resigned after American Express sued the company over disputed charges made two years ago on an American Express card issued to the CEO. The Board of Directors of SAVVIS has accepted the resignation of Robert A. McCormick, Chairman and Chief Executive Officer effective today. Jack Finlayson will continue as Acting Chief Executive Officer. SAVVIS does not intend to comment further on this matter pending resolution of the American Express lawsuit, which is still in litigation. SAVVIS is a global IT utility services provider that focuses exclusively on IT solutions for businesses.

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Credit Card Holiday Spending to Drop 3.5%

Credit card spending in December 2004 totaled GBP 11.4 billion but
this year is expected to be down 3.5% to GBP 11 billion. Debit card
expenditure looks set to reach a new monthly high in December totaling
GBP 17.8 billion, up GBP 3 billion from GBP 14.8 billion in December
2004, a 20% rise). Overall, plastic card use is set to show a
year-on-year rise in December of almost 10%. Total UK spending in
December on cards, cash and cheques is expected to rise 11% to almost
GBP 50 billion according to APACS. The one situation where APACS expects
credit cards to remain the first choice of payment this Christmas is
online. It is predicted that two-thirds of the expected GBP 4 billion
total of plastic card spend online will be made up of credit card sales.

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Paychex Lands NOVA CEO as Board Member

Rochester, NY-based Paychex has elected Pamela Joseph, chairman of U.S. Bancorp Payment Services and CEO of Atlanta-based NOVA Information Systems, as a board member. Joseph joined NOVA in 1994 as vice president of marketing. She held various senior management positions during her tenure before assuming her current role as chairman and CEO in November 2004. NOVA processes approximately $125 billion annually in payment services transactions, generating more than $1 billion in annualized revenues. Before joining NOVA, Joseph was director of new market development for VISA International. Joseph holds a bachelor’s degree in business administration from the University of Illinois at Urbana-Champaign.

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Advanta Expects 06 Card Income of $120MM+

Advanta said it expects its business cards unit to post 2006 pretax income between $120 million to $125 million. These amounts include an estimated increase in operating expenses of approximately $5 million associated with expensing stock options under the new accounting requirement effective January 1, 2006. During 2006, owned and managed receivables are expected to grow between 10% and 20%, while transaction volume is expected to increase between 15% and 20%. Advanta focuses on the small business market and related community, providing funding and support to the nation’s small businesses and business professionals and is one of the nation’s largest issuers (through Advanta Bank Corp.) of MasterCard business credit cards to small businesses.

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Starwood Cardholders Get Le Meridien Access

Starwood Hotels, which has a major co-branding deal with American Express, has acquired Le Meridien Hotels. Starwood Hotels has also entered into management agreements for the owned and leased Le Meridien properties to be acquired by Starwood Capital and Lehman with such hotels continuing to be operated under their current flags. The owned and leased portfolio is made up of 32 luxury, four/five star hotels located primarily across Europe but also in North America, Africa, and South America. Overall, the portfolio consists of over 8,000 hotel rooms in 16 countries. Starwood Hotels holds a market value in excess of $15 billion with ownership of brands such as Westin, Sheraton, “W”, St. Regis, Luxury Collection and Four Points.

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HSBC Mulls a Bid for LG Card

HSBC is reportedly mulling a $10 billion offer for LG Card. HSBC previously approached the Korean Development Bank about a possible deal for LG Card. KDB turned down the offer earlier this year. JP Morgan Chase has been retained to find a buyer for LG. KDB and other creditors are seeking to unload their combined 51% stake in LG Card by the end of this year. The expected sale price is expected to be in the 5 trillion won range. LG Card has posted four consecutive quarters of solid profitability. In the third quarter of 2004, the issuer reported a 46.8 billion won loss. Since then, LG Card has earned 1.47 trillion won. In the first quarter of this year, the issuer earned 479.8 billion won. For complete details on LG Card’s latest performance, visit CardData (www.carddata.com).

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Metavante Completes its LINK2GOV Acquisition

Metavante has completed its acquisition, announced in September, of LINK2GOV. The company will become a Metavante subsidiary, and continue to operate under the LINK2GOV name. LINK2GOV is a provider of online phone and point-of-sale payment processing services, including credit and debit solutions. Metavante Corporation provides banking and payment technologies to financial services firms and businesses worldwide.

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Transaction Volume to Peak Dec 24 Afternoon

An analysis of transaction data indicates that the busiest hour this year may be between 1 pm to 2 pm EST on Saturday, December 24th. According to MasterCard International, a detailed analysis of historical transaction data shows that yesterday could be the most slowest shopping day of the year. A recent survey by Impulse Research, commissioned by MasterCard, reveals that the 67% of consumers cited “Black Friday” as the busiest, while 15% said the Saturday before Christmas. However, historical transaction data from MasterCard shows that in 2004, the day after Thanksgiving was actually the sixth busiest day of last year’s shopping season, and Thursday, December 23rd was the busiest shopping day.

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