COF INTL 4Q/03

Capital One posted another profitable quarter for its international credit card portfolio and global financial services on December 31st. However, profits nose-dived from $21.0 million in the third quarter to $3.3 million for 4Q/03. One-year ago Cap One reported a $58.8 million profit for its international activities. Since the fourth quarter of 2002, Capital One’s international portfolio outstandings have grown 39%, from $11.9 billion to $16.5 billion. Charge-offs for the fourth quarter of this year was 3.69%, compared to 3.78% in the third quarter, and 3.79% one year ago. International delinquency for the fourth quarter of this year was 2.70%, compared to 2.87% in the third quarter, and 3.08% one year ago. Capital One has operations in the United Kingdom, Canada, South Africa and France.

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RBS USA

Britain’s second-largest bank, The Royal Bank of Scotland Group, is expanding its presence in the USA with the purchase this week of the entire credit card business of Connecticut-based People’s Bank. RBS currently owns Rhode Island-based Citizens Bank, which has about 800,000 debit cards, a small business card portfolio, and 1,700 ATMs. Under terms of the People’s deal, RBS will pay a 15.5% premium for the $2.3 billion credit card portfolio. People’s has about 1.1 million credit card customers. People’s began rebuilding its card business four years ago. It posted two consecutive, profitable quarters in the second half of 2003. The portfolio peaked in 4Q/99 with $3.9 billion in card outstandings, and dipped to $1.94 billion in 1Q/03. RBS says it will maintain People’s credit card business employment base in Bridgeport of about 540 people. People’s says it wants to focus on its core retail and commercial banking businesses. The transaction is expected to close this quarter. Average managed card loans for People’s, during the fourth quarter, increased 12% over 4Q/02. Net charge-offs for 4Q/03 were 3.47%, compared to 5.26% for 4Q/02. Delinquencies, as a percentage of quarter-end managed loans, were 2.18%, compared to 3.41% for 4Q/02. The yield on average managed credit card receivables was 7.43% for 4Q/03, compared to 10.55% for 4Q/02.

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VISA’s RED Program Saves Nearly $500MM To-Date

VISA says its “Re-Engineering Disputes” program was the single largest factor in the 38% decline in dispute rates since 2001, resulting in approximately $448 million in fewer losses for merchants and a significant savings for issuing banks. The new “RED” program expedites disputes by increasing automation and communication, streamlining rules and procedures, and using electronic transmission in place of paper documents and the mailbox. Under the program most customer service representatives will be able to assist cardholders within one billing cycle. Eventually, some issuers will be able to offer their consumers access to their dispute resolution information online as well. VISA previously eliminated the requirement for formal written disputes and copies of credit receipts. VISA also reduced dispute categories to 24. (CF Library 8/13/03)

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Citi’s International Card Profits Drop 24% Sequentially

Citigroup’s credit card loans for the EMEA region increased by $600 million during the fourth quarter to $5.2 billion, a 37% gain over one-year ago, partially driven by the acquisition of Diners Europe. However, Citigroup’s overall international credit card profits dropped to $126 million for 4Q/03, a 24% decline from the previous quarter, primarily due to a significant increase in the issuer’s provision for credit losses and costs associated with its expansion into Russia and China. Net charge-offs were 3.84% for 4Q/03 compared to 4.21% one-year ago, according to last week’s issue of CardFlash International ([www.cardflashinternational.com][1]). The 90-day delinquency rate was 1.76%, compared to 1.78% for 4Q/02. Total revenues, for credit cards issued outside North America, came in at $746 million, a 25% increase over 4Q/02. But, the provision for losses increased 47% year-over-year to $423 million, a $94 million increase from the previous quarter. At the end of the year, Citigroup had 15.8 million card accounts, representing $14.7 billion of card loans, in its international card portfolio. Total card volume for the fourth quarter was $11.7 billion, a 29% increase over one-year ago. Latin America card loans increased 25% to $500 million, while Asia (except Japan) increased 17%. Japan posted a 9% increase to $1.2 billion, a two-year high.

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

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Cyota and TSYS Power Providian’s VbV and MSC

Providian is using TSYS and Cyota to provide secure online identification technology for its 10 million cardholders. Providian’s “Verified by Visa” and “MasterCard SecureCode” are available immediately. The anti-fraud service is delivered by TSYS and powered by Cyota’s “SecureSuite.” TSYS implemented Cyota “SecureSuite” in 2001, and has since delivered “Verified by Visa” and “MasterCard SecureCode” services to many of its global clients. “SecureSuite” powered the first “Verified by Visa” program in December 2001, as well as the first “MasterCard SecureCode” program. “SecureSuite” is currently used by eight of the top 12 issuers in the USA and UK.

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Nelms to Keynote Card Forum in May

Thomson Media’s “Annual Card Forum & Expo,” scheduled for early May in Orlando, will feature David Nelms, Chairman & CEO of Discover Financial Services, as a keynote speaker. The opening morning of the conference, Thursday, May 6, will feature the keynote presentation by David Nelms, Chairman & Chief Executive Officer of Discover Financial Services, a business unit of Morgan Stanley. Thomson Media Conferences & Exhibitions, a division of Thomson Media, is the premier provider of mission-critical information for the financial services, advanced technologies, capital markets, and benefit management industries. The Thomson Corporation (http://www.thomson.com), with 2002 revenues from continuing operations of $7.5 billion, is a global leader in providing integrated information solutions to business and professional customers.

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NYBA Names Genpass Preferred Vendor

The New York Bankers Association has selected Genpass Technologies as its endorsed EFT Processor. Genpass Technologies is the only EFT processor with this designation from the New York Bankers Association. The New York Bankers Association (NYBA) has provided advocacy and leadership for the State’s financial services industry, and created a strong, unified voice from a diverse membership. Genpass Technologies, which drives ATMs and processes cards in all 50 states, is listed in ATM and Debit Card News (July 25, 2003) as the second largest third party ATM driver in the U.S. and in The EFT Data Book (2003 edition) as one of the largest transaction processors in the U.S., driving approximately 28,000 ATMs located throughout the country.

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Wincor Wins a Mid-Atlantic ProCash ATM Deal

Mid-Atlantic-based Susquehanna Bancshares has selected Wincor Nixdorf to install approximately 100 “ProCash” ATMs during the next 18 months. Susquehanna will also deploy Wincor’s “ProClassic” software and “ProView: monitoring software solution. Susquehanna will selectively upgrade the remaining 60+ ATMs from other manufacturers with upgraded PCs, color monitors and PIN pads that support Triple DES, as well as new voice guidance features for visually impaired customers. These ATMs will also run on Wincor Nixdorf software after the conversion. The “ProClassic” software platform allows Wincor Nixdorf software to run on other brands of ATMs. The screens, transaction steps and other parameters are downloaded over the network. Wincor’s “ProCash 1500xe,” “2100xe,” “2150xe,” “2250xe,” and “2350xe” models will be installed at Susquehanna.

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People’s Sells Card Business to RBS for a 16% Premium

CT-based People’s Bank confirmed this morning it is selling its $2.3 billion credit card business to The Royal Bank of Scotland Group for a 15.5% premium. People’s has been rebuilding its card business over the past four years, and posted two consecutive, profitable quarters in the second half of 2003. The portfolio peaked in 4Q/99 with $3.9 billion in card outstandings, and dipped to $1.94 billion in 1Q/03, according to CardData ([www.carddata.com][1]). RBS says it will maintain People’s credit card business employment base in Bridgeport. People’s says it wants to focus on its core retail and commercial banking businesses. The transaction is expected to close this quarter. Average managed card loans during the fourth quarter increased 12% over 4Q/02. Net charge-offs for 4Q/03 were 3.47%, compared to 5.26% for 4Q/02. Delinquencies, as a percentage of quarter-end managed loans, were 2.18%, compared to 3.41% for 4Q/02. The yield on average managed credit card receivables was 7.43% for 4Q/03, compared to 10.55% for 4Q/02. For complete details on People’s Bank fourth quarter results visit CardData ([www.carddata.com][2]).

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

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Provo Paycard Planned for Hispanic Employees

NY-based Provo International has signed an agreement with OH-based Sutton Bank to offer the “Provo Paycard” payroll debit card to payroll companies and employers of Hispanic workers in the USA. The Provo Paycard offers employers and employees many advantages over paper paychecks. Employers benefit from lowering payroll costs, while employees save on check cashing and money transfer fees, and enjoy worldwide ATM access and debit card acceptance. Sutton Bank is a community based financial institution headquartered in North central Ohio. The Provo US division is a leading provider of Internet bandwidth services and award winning Ecommerce, programming and website development, design and hosting services through its PlanetMedia group,www.pnetmedia.com.

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Optimum Pay to Offer FSV STV Cards

Optimum Pay has inked a deal to deliver customized stored value card programs to third party solution providers as processed and supported by Houston-based FSV Payment Systems’ platform. Optimum Pay has recently developed a unique dual card program, also processed by FSV. Branded as ‘Transmitter,’ this card program is specifically intended for the un- and under-banked market segments, as well as immigrant employees seeking to send money to their families and/or relatives in the U.S. or elsewhere. FSV Payment Systems offers a robust suite of unique, host-based stored-value and payroll debit card solutions direct to large employers and to financial institutions through an exclusive agreement with Fiserv Inc.. Optimum Pay was founded on the principle of offering a simpler, less-expensive alternative to traditional payment process methods such as paper invoices, credit cards, checks and cash.

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FTC Slams an Arizona Fraud Protection Firm

The FTC has filed suit against Arizona-based Vector Direct Marketing, d/b/a National Solicitation Guard and Anti-Solicitation Company, for a misleading offer for a $400 service to help consumers stop unwanted telemarketing calls and protect their personal information from fraud. The FTC filed the complaint announced today against Vector Direct Marketing, LLC (Vector), doing business as National Solicitation Guard and Anti-Solicitation Company. According to the FTC, since at least February 2003, Vector telemarketed services that it claimed would stop unwanted telemarketing calls and protect consumers’ personal information from fraud and identity theft. The Commission’s complaint against the Vector defendants contains five counts, two alleging violations of the FTC Act and three of the TSR.

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