Magazine article American Banker

BankAmerica May Be Mulling Credit Card Exit

Magazine article American Banker

BankAmerica May Be Mulling Credit Card Exit

Article excerpt

BankAmerica Corp., which helped invent the bank credit card, may be contemplating a retreat from that increasingly crowded field.

As BankAmerica officials discuss ways to reinvigorate their card business, analysts say that a sale or spinoff is at least in the backs of strategists' mind".

"I personally think they're seriously questioning whether it's a business they want to stay with on a long-term basis." said Judah Kraushaar, bank analyst at Merrill Lynch $ Co. ,

Such a retreat would monumental given the size of the business -- the card portfolio had $7.6 billion of outstandings on June 30, No. 6 among bank issuers -- and

The BankAmericard, the first nationally distributed bank credit card, gave rise in the 1960s to the national association that eventually became Visa U.S.A. and Visa International. When Visa adopted its current name in the mid-19709, rights to the BankAmericard name reverted to Bank' America.

BankAmerica officials recently told analysts that credit cards contributed only 5% of earnings in the second quarter, off from 40% in early 1989.

Demographics Wrong

To be sure, part of the story is that profits from other business lines are rising while credit card growth is leveling off.

But "it sounded like they were considering partially or totally exiting the business," said, an analyst who asked not to be identified by name.

"They're finding that the business doesn't have the right demographics," the analyst said, noting that consumers are trying to pay off their debts. …

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