Barclaycard is to take over the running of the House of Fraser store card business under a joint venture partnership with the upscale retailer.
The current House of Fraser loyalty and storecard business - which is run by GE Consumer Finance - has over one million active cardholders. From 2007, when the GE contract expires, the new joint venture will manage existing and new accounts and explore opportunities for developing a range of financial products.
House of Fraser is understood to have entered negotiations with Barclaycard after GE declined to pay an £18 million upfront fee to renew the contract.
Under the agreement, Barclaycard will pay House of Fraser £25 million - a 16% to 18% premium - over the next two years for the transfer of receivables to the new joint venture business. The bank and retailer will share the profits generated by the joint venture on a 50/50 basis.
Peter Crook, managing director of Barclaycard's UK Consumer Finance business
comments: "Our partnership with House of Fraser will deliver growth for our UK lending business, give House of Fraser joint control of its cards business and signals real competition in the store cards market."
He says the move underlines Barclaycard's strategy to grow its UK lending with contributions from non Barclaycard-branded businesses, such as Monument, Littlewoods Financial Services and Clydesdale Financial Services.