Citicorp Bids For At&T; Cards
Citicorp is trying to buy AT&T’s Universal credit card, a deal that would catapult Citicorp, already the nation’s biggest credit card issuer, far ahead of its next competitor.
If it buys the AT&T cards, Citicorp is expected to take a close look at whether to start charging an annual fee on the AT&T cards, which were introduced in 1990 with a promise of no fees for life. Citicorp issues Visa, MasterCard and specialty cards, some of which charge an annual fee.
“I think Citibank might tinker with” AT&T’s no-fee policy, said Jim Daly, editor of Credit Card Management, an industry magazine. “But I think they might tread carefully, because they don’t want to mess with the AT&T brand.”
Consumers often pay higher rates when their credit cards are sold to another company, said Robert K. Heady, publisher of Bank Rate Monitor. “The new lender believes that to increase profitability, it has to raise rates. When cards are sold, rates are liable to go up. The poor consumer sitting there doesn’t know what happened.”
Neither Citicorp nor AT&T would confirm late Wednesday that Citicorp had won the bidding for the AT&T’s portfolio, which holds about $14 billion of cardholders’ debts.
AT&T’s board met Wednesday. While it could not be confirmed whether the sale to Citicorp was even on its agenda, Citicorp spokesman Jack Morris said it was “widely known” that Citicorp had bid on the portfolio. Analysts pegged a sale price at between $3 billion and $4 billion, figures that neither Citicorp nor AT&T would comment on.
David Robinson, an analyst with the industry newsletter Nilson Report, said Banc One also had bid on the portfolio, and there was speculation that GE Capital, Wells Fargo & Co. and NationsBank Corp. had each bid as well.
Analysts were betting on Citicorp, which unlike Wells and NationsBank has not made a big acquisition lately, as the likely victor.
The deal would raise Citicorp’s credit card portfolio from $46.5 billion, as of Sept. 30, to $61 billion. That is far ahead of MBNA Corp., which is now the second-largest issuer with $42 billion in receivables.
MBNA “was starting to nip at Citi’s heels,” Daly said. “It’s almost like Citi had to do this.”
xxxx Top card issuers Here are the nation’s largest credit card issuers, by amount of money owed in billions of dollars as of Sept. 30, 1997, according to the credit card industry analyst Nilson Report: 1. Citicorp, $46.5 2. MBNA America, $41.8 3. Banc One, $36.74 4. Chase Manhattan, $31.5 5. First Chicago NBD, $17.31 6. Household Credit Services, $16.13 7. AT&T, $14.17 8. Fleet Bank, $13.24 9. Capital One Financial, $12.25 10. Bank of America, $10.14