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U.S. Bank buys $700 million credit portfolio from BofA

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posted on Dec, 22 2011 @ 05:53 PM
Seems that BofA is restructuring its practices because

"We decided earlier this year that agent bank card business ... wasn't core to our goal of building deep relationships with consumers," Bank of America spokeswoman Betty Riess said.

Yeah. They need to do more than this to make customers happy.
But, I digress.....

U.S. Bank has bought a $700 million portfolio of credit cards from Bank of America, as BofA exits the business of handling cards for other financial institutions.

Minneapolis-based U.S. Bank said Wednesday that the portfolio being acquired by its Elan Financial Services unit includes small business and consumer cards from 28 banks, credit unions and other financial institutions, including Edward Jones, a financial services firm. It's one of the largest credit card acquisitions Elan has made in its four decades.

Terms of the deal and purchase price weren't released.

"This is a very nice addition to pick up in one purchase," said Pamela Joseph, vice chairman and head of U.S. Bancorp Payment Services.

Elan plays a behind-the-scenes role supporting and marketing credit cards issued by other institutions. It will own the credit card assets of the new portfolio, it said, but continue branding and marketing the cards under the names of the 28 other banks.

That's a business that Charlotte, N.C.-based Bank of America, looking to raise money, wants out of. Its card-issuing arm, FIA Card Services, plans to exit the agent bank credit card business by the end of 2012, although it will continue to issue other sorts of cards.

BofA took a $10.4 billion write-down on its FIA card business in the third quarter last year, citing deteriorating credit quality and effects from the Dodd-Frank financial overhaul law. The charge helped drive the bank's $7.3 billion loss that quarter.

The lender earlier this year upped the goodwill write-down to $20.3 billion for 2009 and 2010.

U.S. Bank, a leading agent bank card issuer, is eagerly growing that business and has made more than 300 card acquisitions over the last six years. The Elan unit issues co-branded cards for smaller banks and credit unions and such companies as Kroger, REI and Toyota. It also provides other services such as managing ATMs and processing debit cards.

Overall, the payments business made up more than a quarter of U.S. Bank's sales of $20.5 billion last year.

It's difficult to see what's going on here and what it means in the long run. To me, it seems as though Bank of America had no choice but to sell this part of their business to cover all of the law suits they're dealing with as well as try to look somewhat responsible to regulators who are scrutinizing their business practices right now.

Hopefully, this won't help them at all except to keep them afloat a little longer and prolong their death throws.
Not to mention the fact that they have laid off so many employees makes me wonder if this is the department these folks worked in.
edit on 22-12-2011 by Afterthought because: (no reason given)

posted on Dec, 22 2011 @ 07:51 PM
reply to post by Afterthought

BofA is failing anyhow, at least this buyout is an American bank. I have a question, there is BofA and BodE, is BofE tied to BogA? Because Europe is crashing aftetall, sorry Europe, really I think this is real sad and bad, cause your countries are more vulnerabil to corporate-elites-political control when we loose our economies.
Edit to add, maybe it starting out at 700 million as to avoid panic, sell it off slowly so everyone don't rush them at the same time
edit on 22-12-2011 by lbndhr because: (no reason given)

posted on Dec, 22 2011 @ 07:58 PM
reply to post by lbndhr

They probably are the same. I know that when they took the first government bailout, they formed the Bank of Asia. Maybe they're trying to get as many dollars as possible, then conducting currency trading.

They're definitely on the way out, but I still woutldn't trust any bank. They're all corrupt as far as I'm concerned. I'm even getting nervous about credit unions and thinking about going with the Bank of Mattress.

posted on Dec, 23 2011 @ 10:51 AM
reply to post by Afterthought

I have a small town credit union its a real good bank BUT back in February we started pulling the money out we only put in that which requires a check. I had to go into the bank about my mortgage after we was done talking to her she asked us why we pulled all our money, she did first say im nit trying to be nosey, I told her I know the bank is strong but these fed backed accounts guaranteed up to 1million sounds good but if a true economic fallout, a depression happens the fed reserve will in no way beable to pay back. This if the 1930's depression. Zero available $$ in the bank to pay.

posted on Dec, 23 2011 @ 10:54 AM
reply to post by lbndhr

Very smart move.
There's nothing wrong with covering your arse. More people should.

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