Ameriprise Financial Spin-Off Set for 9/30

The American Express Board has approved the spin-off of its financial advisors business to shareholders on September 30th. The distribution of Ameriprise Financial, Inc. (formerly, American Express Financial Corporation) shares will be made on September 30, 2005 to American Express shareholders of record as of the close of business on September 19, 2005. American Express will distribute one share of Ameriprise common stock for every five shares of American Express common stock outstanding as of the record date. American Express Company (founded is a global travel, financial and network services provider.

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European Delinquencies Rise in 2Q/05

Delinquency, among $47.7 billion in European credit card-backed securities, hit a record 4.96% in the second quarter. However, the charge-off rate in the second quarter stabilized at 4.66%, after marching upward since the end of 2003. According to Standard & Poor’s latest “Credit Card Index Report for European ABS,” there was not one particular driver for the increase in the delinquency rate, as most issuers experienced the up tick. S&P says there was a marked rise in the charge-off rate for Capital One, which increased from 5.0% in November 2004 to 6.9% in June 2005. But, Barclaycard and MBNA, which make up 63% of the index, had small movements in the second quarter compared with the first quarter, resulting in the index remaining flat. Yield and payment rates increased slightly in the second quarter, to 18.14% and 16.87%, respectively.

EUROPEAN CREDIT CARD INDEX
Dec03 Jun04 Dec04 Jun05
Yield (%) 18.36 18.26 17.36 18.14
Charge-offs (%) 4.02 4.25 3.93 4.66
Delinquencies (%) 4.01 4.18 4.36 4.96
Payment rate (%) 18.91 18.91 16.60 16.87
Source: Standard & Poor’s

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ABS 2Q/05

Delinquency, among GBP26.5 billion in European credit card-backed securities, hit a record 4.96% in the second quarter.
However, the charge-off rate in the second quarter stabilized at 4.66%, after marching upward since the end of 2003. According to Standard & Poor’s latest “Credit Card Index Report for European ABS,” there was not one particular driver for the increase in the delinquency rate, as most issuers experienced the up tick. S&P says there was a marked rise in the charge-off rate for Capital One, which increased from 5.0% in November 2004 to 6.9% in June 2005. But, Barclaycard and MBNA, which make up 63% of the index, had small movements in the second quarter compared with the first quarter, resulting in the index remaining flat. Yield and payment rates increased slightly in the second quarter, to 18.14% and 16.87%, respectively.

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MasterCard Intros Core Benefit Bundles

MasterCard is launching seven core benefits bundles for issuers to to offer on their “Gold” and “Platinum” MasterCard credit and debit cards. Issuers will be able to choose from bundles of retail, travel, and combination benefits that become effective on September 1st. Retail bundles include combinations of extended warranty, purchase assurance, and satisfaction guarantee. Travel bundles include collision damage waiver, roadside assistance and coverage against hotel/motel burglary and lost luggage. Issuers will be able to make their benefit choices on an annual basis, with an option to purchase additional benefits to complement the bundles they offer. The benefits only apply to cards with credit lines or total relationship balances of $2,000 or more.

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Citibank Enters Contactless Payments

Citibank has made its entry in the emerging contactless payment arena by introducing the “MasterCard PayPass” key chain fob for its debit card customers. As it launches the debit fob this fall, Citi will begin to pilot “PayPass” for its credit card customers. Following the initial launch in the New York market, Citibank plans to roll out 2.5 million “PayPass” debit devices nationwide. The new “Citibank MasterCard PayPass” will limit daily purchases to $150. The program will continue to offer “ThankYou Points” on all debit transactions. Earlier this month Cleveland-based KeyBank become the first bank in the USA to launch “MasterCard PayPass” debit cards. However, the KeyBank “PayPass” is not a fob like Citibank. (CF Library 8/4/05)

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RBA Extends Access Regime to VISA Debit

The Payments System Board has decided to impose an “Access Regime” on the VISA Debit System. The Board says this was done to ensure that Specialist Credit Card Institutions are eligible to join the VISA system to provide services to merchants accepting both VISA credit and debit cards. The regime will override VISA’s Australian rules which might otherwise have prevented some SCCIs from joining the VISA system. The “Access Regime,” which VISA supports, is largely the same as that imposed on the VISA credit card system in February 2004.

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Absa Extends its BASE24 License

Absa has renewed its license for ACI Worldwide’s “BASE24” software to run its entire ATM and POS networks. The license runs for five years and marks a ten year business partnership with ACI. The bank has also signed a new five year “BASE24” extension with plans to migrate to “BASE24-es,” ACI’s next generation platform for payments processing.
Absa’s network has grown from 1,600 ATMs in 1996 to over 5,233 ATMs today. Since then, ATM traffic has more than doubled and now stands at a peak rate of 37 million transactions per month. POS volumes have grown from less than half a million transactions per month in 1996 to around 11.7 million per month today. Barclays recently acquired a majority stake in Absa.

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Equifax Hires a GE Executive as CEO

Equifax has named Richard Smith, former senior executive at GE, as CEO and Chairman-elect, succeeding Thomas Chapman, who is retiring at the end of the year. Mr. Smith, 45, joins the company after 22 years with General Electric Co. Most recently, he was Chief Operating Officer of GE Insurance Solutions, GE’s global insurance group with $10 billion in revenue and $50 billion in assets in 2004. Mr. Smith led all business units for GE Insurance Solutions, including property and casualty reinsurance, commercial lines insurance, and life and health reinsurance. Equifax provides credit analysis to businesses and assists consumers with effective credit management.

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VISA to Open a Karachi Office Next Year

VISA has expanded its business operations in Pakistan with the
commitment to open an office in Karachi early next year. VISA has
already launched several initiatives with local members over the past six
months. Over the last 12 months, annual retail sales volume in Pakistan
was a record US$430 million, an increase of more than 60%. Today, there
are more than 845,000 VISA cards in circulation in the country – an
annual growth rate of more than 100%. There are currently 238 million
VISA-branded cards in the Asia-Pacific region.

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Chase and United Incent School Purchases

Chase and United Airlines this week announced that its “United Mileage Plus VISA” will award two miles for every dollar spent that exceeds $1,000 and is paid directly to schools through the end of this year. This includes tuition for colleges and universities, as well as public and private elementary and secondary schools, school bookstore purchases, season football tickets, school donations and more. The “United Mileage Plus VISA” is also offering extra bonus miles though September 30th for back-to-school purchases from Office Max, Banana Republic/Gap/Old Navy, IKEA and Borders. The bonus miles are part of the programs’s “More Miles” feature.

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GE Consumer Finance Buys a Stake on Garanti

GE Consumer Finance is taking a 25.5% stake in Turkey’s Garanti Bank for about US$1.5 billion. GECF is buying the shares from Dogus Holding which held 51% of the stock. Garanti currently serves five million customers through a network of 419 branches nationwide. During the second quarter, GECF formed an alliance with Caja de Ahorros del Mediterraneo in Spain and acquired a significant stake in BAC International Bank, a privately held retail bank and credit card issuer with 178 branches in six Central American countries. One-year ago GECF acquired Moscow-based DeltaBank, a VISA issuer with more than 103,000 credit cards in-force. During the second quarter, GECF posted a profit of $735 million, a 23% gain over the year- ago quarter.

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