Bankruptcy Card Losses Top $90B Since 1999

The bank credit card industry has lost more than $122 billion to personal bankruptcies since the introduction of bankruptcy reform legislation in Congress eight years ago. Since 1996, charge-offs cumulatively total $282 billion, peaking at nearly $50 billion in 2002. Therefore, bankruptcy losses are significantly higher than $122 billion as charge-offs are discharged in subsequent years. In 1995, bankruptcy-related charge-offs were $4.6 billion, or 30% of gross charge-offs. In 2001, bankruptcy-related charge-offs doubled from year 2000, from $9.9 billion to $19.1 billion, comprising 48% of all charge-offs. Last year, bankruptcy losses edged down to $16.5 billion as the number of petitions declined.

BANK CREDIT CARD BANKRUPTCY LOSSES
($ billions)
YEAR RECV C-O C-O BR NET
1995: $358 4.31% $15.4 30% $ 4.6
1996: $412 4.85% $20.0 41% $ 8.2
1997: $444 5.63% $25.0 42% $10.5
1998: $454 5.49% $24.9 42% $10.5
1999: $490 4.98% $24.4 40% $ 9.8
2000: $569 4.58% $26.1 38% $ 9.9
2001: $608 6.55% $39.8 48% $19.1
2002: $661 7.51% $49.6 47% $23.3
2003: $677 7.22% $48.9 46% $22.5
2004: $698 6.22% $43.4 38% $16.5
RECV-year-end receivables; C-O: charge-offs; BR- percentage
of charge-offs in bankruptcy; NET: net losses due to bankruptcy.
Source: CardData (www.carddata.com)

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Cap One’s Feb Charge-Offs and Delinquency Dip

Capital One’s charge-off and delinquency ratios headed down in February. Charge-offs dropped 13 basis points from the prior month and delinquency decreased 19 basis points from January. Compared to one year ago, charge-offs are down 79 bps and delinquency is down 49 bps. The downtick was helped by a $2.6 billion increase in total loans. For February, Cap One reported that managed charge-offs decreased to 3.96% in February, compared to 4.19% in January, and 4.75% one-year ago. In June 2003, Cap One’s managed charge-off ratio stood at 6.20%. Delinquency decreased to 3.65% for February, compared to 3.84% in January, 3.92% for December, 3.87% for November, 3.94% in October, and 3.90% for September. Delinquency one year ago stood at 4.14%. At the end of February, Capital One had $81.9 billion in global outstandings. At the end of the fourth quarter, U.S. card outstandings of $48.6 billion were up 5%, compared to one year ago, and to the previous quarter. For complete details on Capital One’s monthly metrics and 4Q/04 performance, visit CardData ([www.carddata.com][1]).

Capital One 2004-2005
Month Charge-offs Delinquency
Feb 04 4.75% 4.14%
Mar 04 4.74% 3.80%
Apr 04 4.70% 3.69%
May 04 4.40% 3.73%
Jun 04 4.17% 3.76%
Jul 04 4.10% 3.77%
Aug 04 3.87% 3.80%
Sep 04 4.18% 3.90%
Oct 04 4.10% 3.94%
Nov 04 4.35% 3.87%
Dec 04 4.63% 3.92%
Jan 05 4.19% 3.84%
Feb 05 3.96% 3.65%
Source: CardData (www.carddata.com)

[1]: http://www.carddata.com

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Welcome Real-time Powers a Pakistan VISA

Pakistan’s United Bank Limited has launched its first VISA smart credit card. The new “UBL VISA” offers instant “Chip Rewards,” “RoadMiles,” and “Talk-Time.” The new card is powered by Welcome Real-time’s “XLS” software. UBL’s acquiring partner, RFM Loyalty, uses “XLS Server” to manage a network of payment terminals, which are equipped with a payment application developed using “XLS POS” software libraries. The “RoadMiles” feature offers free petrol every month based on spending. “Talk-Time” offers free phone minutes based on total spending, in addition to a free connection. UBL has more than 1,000 branches in Pakistan and a customer base of more than 3.5 million. RFM Loyalty is Pakistan’s only smart card solution provider. Welcome is a provider of payment software that utilizes the full capabilities of EMV standard chip credit and debit cards.

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Senate Vote on Bankruptcy Reform Delayed

The “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005” is expected to take a final vote today in the U.S. Senate. The bill was delayed yesterday after Senators Paul Sarbanes, John Warner, and Patrick Leahy proposed an amendment to prohibit an investment bank that advises a company before it files for bankruptcy from continuing to advise it after the company is in bankruptcy. However, other amendments proposed yesterday were voted down. Senator Edward Kennedy’s amendment to cap the homestead exemption at $300,000 was rejected. Senator Chris Dodd’s amendment to permit larger education payments and to protect child support payments was also rejected.

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Oberthur Smart Card Sales Rise 16% in 04

Oberthur Card Systems reports that sales for last year reached 450.8 million euros, a 7% year-on-year increase before parity impact, and 4.8% at current rates. During this period, Oberthur delivered 148.3 million micro-processor cards, a 16% increase compared with last year, while the average selling price declined by 5.5% at constant exchange rates. The Company said there was an explosion of micro-processor payment cards, especially in the UK, which triggered an increase of +39.6% in shipments and +34.6% in sales. Also, continued and sustained increase of banking personalization services in Europe resulted in +18.2% growth. In the banking segment, Oberthur expects EMV deployments to accelerate over the next two years in Italy, Spain, Turkey, Thailand, China, Russia, Brazil and Mexico. For complete details on Oberthur’s latest results, visit CardData ([www.carddata.com][1]).

[1]: http://www.carddata.com

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ADS to Issue the Z Gallerie Store Card

Dallas-based Alliance Data Systems Corp.announced a five-year agreement to provide private label credit card services for furniture retailer Z Gallerie. Alliance Data Systems is a leading provider of transaction, credit and marketing services for and manages approximately 95 million consumer relationships. Z Gallerie has 59 retail locations in 17 states and $200 million in annual sales.

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Coinstar Acquires a Prepaid Card Concern

Coinstar, Inc. has acquired Washington-based Mundo Communications Network. Mundo adds 2,300 retail accounts and additional pay-as-you-go products to Coinstar’s e-payment services business. Coinstar, Inc. is a multi-national company offering a range of products consisting of coin counting, electronic payment solutions, and entertainment services at more than 44,000 retail locations worldwide.

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Dresser Wayne Lands the Shell Oil POS Deal

Dallas-based Dresser Wayne has finalized negotiations with Shell Oil securing a multi-year arrangement as a key worldwide supplier of fuel dispensing equipment. Dresser Wayne, a business unit of Dresser, Inc., manufacturers, supplies and services petroleum fuel dispensers, dispenser control systems, card processing terminals and point-of-sale systems in over 75 countries. Dresser, Inc. is a sales presence in over 100 countries with manufacturing or customer support facilities in 22 countries.

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Fiserv EFT Certified for CUSC NGN

Wisconsin-based Fiserv EFT has become the first and only third-party processor to be certified by Credit Union Service Corporation for access to the Next Generation Network switch, a technology platform providing functionality, fraud prevention and connectivity capabilities. CUSC represents 55% of all national locations and 68% of credit unions participating in shared branching. Fiserv, Inc. provides information management systems and services to the financial and health benefits industries and serves more than 16,500 clients worldwide with $3.4 billion in processing and services revenues in 2004.

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Consumer Spending for Online Content Up 14%

A new survey shows that consumer spending for online content in the US grew to $1.8 billion in 2004, a 14% increase over 2003. Spending on “Entertainment/Lifestyles” grew 90%, to $413.5 million last year, while spending on “Business/Investment” content declined 6% over that same time period. According to the Online Publishers Association’s report, online “Personals/Dating” remained the leading paid content category in 2004, with spending at an all-time high of $469.5 million for the year, up 4% over 2003. According to the report, 19 million U.S. consumers paid for online content in the fourth quarter, up 2.6 million over the same period in 2003. With growth in paid content consumers outpacing growth in U.S. Internet users, paid content consumer penetration in the fourth quarter reached its highest point yet at 11.6%, while average consumer spending remained flat.

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