Magazine article American Banker

Potholes for PNC in Selling Services through Auto Clubs

Magazine article American Banker

Potholes for PNC in Selling Services through Auto Clubs

Article excerpt

PNC Bank Corp. has not gotten all the mileage it expected from its hard- won endorsement early this year by the American Automobile Association.

The contract allowed PNC to market financial services - from creditcards to home loans to mutual funds - to the 38 million members of regional AAA clubs.

PNC wanted to pave the way by acquiring and consolidating the credit card portfolios that other banks had been accumulating since marketing through auto clubs began in the 1970s. But that road has been bumpy: Seven banks are holding out on PNC.

Fourteen AAA clubs - all in contracts with other banks - have not agreed to transfer their allegiance to PNC.

Banc One Corp., which controls the largest AAA portfolio that PNC wants, does not appear eager to give up its 1.2 million accounts with $1.2 billion of outstanding debt.

In contrast, Mellon Bank Corp., PNC's local rival in Pittsburgh, decided to get out of the AAA business. Just this week PNC purchased from Mellon more than 1.3 million accounts with balances of $771 million; the buyer paid a premium on the receivables of 15.16%.

Mellon and Banc One had the majority of the 3.8 million AAA MasterCard and Visa cards, and both vied against PNC for the association's broader and potentially lucrative financial services endorsement. Banc One has offered AAA credit cards since 1980.

A spokesman for Mellon said it was "logical" to sell the card portfolio given PNC's exclusive rights from the AAA.

But when PNC got the endorsement in January, Banc One vowed to continue its relationships with 58 auto clubs.

James J. Gudinas, AAA's managing director of financial services, said Banc One and the other banks are currently in "active discussions" with PNC.

Banc One spokesman John Russell declined to comment on Banc One's plans. He said it would "make sense" for the smaller clubs to give up their relationships with other banks and work with PNC. …

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