Magazine article American Banker

Morgan Stanley Says Visa Thwarted Bank One Deal

Magazine article American Banker

Morgan Stanley Says Visa Thwarted Bank One Deal

Article excerpt

Morgan Stanley Dean Witter & Co. says Visa International blocked it from acquiring Bank One Corp.'s credit card portfolios in Canada and the United Kingdom.

Morgan Stanley, which issues the Discover card in the United States, has planned to start issuing credit cards with its brand and Visa's in those countries. Last year it began issuing MasterCards in the United Kingdom.

Visa International's longstanding bylaws prohibit competing companies -- Morgan Stanley Dean Witter and American Express Co. are mentioned by name -- from issuing the Visa brand, and these were apparently the bylaws Visa cited in scuttling the Bank One-Morgan Stanley deal.

MasterCard has similar bylaws, but they apply only in the United States. The bylaws of both card associations are the subject of an antitrust lawsuit filed by the United States Department of Justice; Morgan Stanley is vocally supporting the Justice Department's action.

"The need for Visa membership was discussed and was a contingency of the agreement, and in fact, Morgan Stanley was given assurances through the negotiations that there were not obstacles to its membership," said Beth Metzler, a spokeswoman for Discover Financial Services Inc., the credit card unit of Morgan Stanley Dean Witter.

But after the deal was inked, Visa "indicated that Bank One couldn't sell its business to Morgan Stanley," Ms. Metzler said. "We believe Visa's actions are anticompetitive and illegal."

Russell Yarrow, head of corporate communications for Visa International, said, "Visa was never a party to these negotiations" between Bank One and Morgan Stanley. …

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