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"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.
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.