Providian Gets Ratings Upgrade and a Positive Outlook

The senior unsecured rating of Providian Financial was upgraded this morning by Fitch Ratings to “B+.” The “Rating Outlook” for Providian was also revised to “Positive” from “Stable.” Fitch says Providian has implemented more conservative underwriting and servicing practices and sold non-core assets, which have improved credit quality and liquidity. The “Positive Outlook” reflects Fitch’s view that if Providian can sustain improvements in credit quality and profitability, and resolve all regulatory issues, ratings could be raised further from their current levels. The company’s stock was trading around $11.30 per share this morning.

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Raiffeisen Bank Signs Outsourcing Agreement with Euronet

Raiffeisen Bank has signed a multi-year agreement with Euronet Worldwide for end-to-end ATM, EFT POS and transaction gateway outsourcing services. Raiffeisen Bank, the third largest retail bank in the country, has approximately 600 ATMs and 2,700 EFT POS terminals. The bank plans to deploy an additional 300 ATMs and 3,300 EFT POS terminals in the first 24 months of this partnership. Raiffeisen Bank has used Euronet’s Integrated Transaction Management software for their debit card, ATM, POS and merchant management systems since November of 1999.

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Card Delinquency Still Climbing, But Slowly

Credit card delinquencies, based on total dollars outstanding, edged up slightly to 4.51% during the second quarter, and remain well above last year’s second quarter delinquencies of 4.08%. However, the number of past-due credit card accounts fell slightly to 4.04%, compared to a record high of 4.07% in the first quarter. The data are based on statistics gathered by the American Bankers Association for its quarterly “Consumer Credit Delinquency Bulletin.” The composite ratio of closed-end installment loans 30 days or more past due rose to 2.18% of all accounts from 2.12%, the highest since the fourth quarter of 2001. Home equity loan delinquencies rose to 2.48% from 2.02%, based on the number of accounts. Personal loan delinquencies rose to 3.17% in the second quarter from 3.13% in the previous quarter.

2Q CREDIT CARD DELINQUENCY HISTORY (based on total dollars outstanding)
2002: 4.08% 1998: 4.57% 1994: 3.06% 1990: 3.46% 1986: 3.83% 1982: 3.03%
2001: 4.13% 1997: 5.24% 1993: 3.86% 1989: 3.06% 1985: 2.88% 1981: 2.86%
2000: 3.54% 1996: 4.61% 1992: 4.19% 1988: 3.44% 1984: 2.80% 1980: 3.25%
1999: 4.10% 1995: 3.58% 1991: 4.48% 1987: 3.28% 1983: 2.81%
Source: American Bankers Association Delinquency Bulletin

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Desjardins Group Selects Elix for Voice System Services

Desjardins Group has selected Elix for the implementation of its “AccesD” and VISA Desjardins voice system services. Desjardins will use the “Elix IVS VoiceXML for Windows 2000” interactive voice response platform. Elix’s expertise is used by VISA, Duke Power, ABN-AMRO, IKEA, and Air Canada. The platform also allows the integration of an automated speech recognition system that will facilitate telephone banking transactions for Desjardins’ members.

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Credit Card-Backed Bond Charge-Offs Head North

Credit card asset-backed securities posted charge-offs of 6.78% for the July collection period. This is the first time that charge-offs increased in three months. However, delinquency (60+ day) declined for the fifth consecutive month, falling four bps to 3.40%. But, the delinquency index remains 21 bps above the level one year prior. The stats come from Fitch’s monthly report on card bond performance. Fitch says performance metrics are expected to remain under pressure through year end as consumer credit quality deterioration will continue. Fitch noted that key factors contributing to the deterioration of consumer credit quality are rising unemployment and mounting bankruptcy trends. On the positive side, lingering effects of mortgage refinancings and tax rebates and the persistent low interest rate environment, should help maintain robust consumer spending patterns in the near term.

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Hong Kong and Shanghai Banking Corporation Licensed for International Cards

The State Bank of Viet Nam this week gave permission to the Hong Kong and Shanghai Banking Corporation to issue international credit cards and payment cards in the country. Three months ago, Eximbank and Asia Commercial Bank, for the first time, began issuing credit cards denominated in Vietnamese dongs. International payments cards are also issued by East Asian Bank, the Sai Gon Commercial Bank, and Vietincombank.

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Hypercom Provides Nuts and Bolts of the New BioPay Program

Hypercom said yesterday it is supplying the hardware for the new “bCheck” biometric payment service launched this week in the suburban Washington, DC area. Hypercom is supplying its “ICE” card payment terminals and “BioPIN” finger-scanning pads. VA-based BioPay is using its “bCheck” system, which enables consumers to use their finger image to authorize a debit from a checking account. An initial roll out to nearly two dozen retail locations has just been completed. BioPay says “bCheck” transaction costs are 75% less than the costs of credit card and off-line debit transactions. (CF Library 9/23/03)

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