Bank of America Unloading International Credit Card... - Other News

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Credit Card Applications » News » Other » Bank of America Unloading International Credit Card Biz

Bank of America Unloading International Credit Card Biz

Bank of America Unloading International Credit Card Biz

Bank of America CEO Brian T. Moynihan has made the decision to sell off the lending institution’s international consumer card business. This, and by scaling back on home lending and such, will afford Bank of American an opportunity to better focus on investment banking, corporate borrowers and US retail clients.

“Our strategy is clear: we have been transforming the company to deliver the franchise to our core customer groups, and building a fortress balance sheet behind that,” said Moynihan. “While the credit card remains a fundamental core product for our U.S. customers, an international consumer card business under another brand is not consistent with that strategy.”

Since he took over from Ken Lewis last year, Moynihan has sold off more than 20 of BofA’s assets, such as its Spanish card unit and a UK small-business card unit. This “aggressive selling of non-core assets to continue to generate capital, increase our focus and lower risk,” Moynihan said in a conference call last week, as reported by Bloomberg.

“Bank of America is shrinking because they need to make sure they’re using their capital in the most profitable ways,’’ said Jefferson Harralson, an analyst at KBW Inc. with a “market-perform’’ recommendation on the bank to Bloomberg. “During the Ken Lewis era, you could run the bank with much lower capital; the changes in capital requirements are pushing them to keep the most profitable customers and shed the rest.’’

During his time as their CEO, Lewis spent over $130 billion building BofA into the largest US bank by assets.

It is absolutely necessary for Bank of America to meet the Basel Committee on Banking Supervision standards, which were created to build a buffer against losses in the attempt to prevent the 2008 financial crisis from repeating itself. Moynihan claims the bank can avoid diluting investors’ holdings by eliminating riskier assets, as opposed to having to sell new shares.

BofA’s latest move is to sell their Canadian card portfolio, to Toronto-Dominion Bank.

Negotiations to reach the deal had been in the works for some time though, according to a spokesman for the Bank of America.

The Wall Street Journal reported the spokesman said “this has been a systematic approach to the international card business throughout this year. This is the latest step.”

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