Barclays Bank has signed an agreement to acquire the UK credit card operation of Providian Financial Corporation, subject to regulatory approval.
The move underlines Barclaycard’s stated strategy to grow its core UK credit card business and gives Barclaycard £395 million in receivables and £10 million other net assets from the American-owned business’s approximately 500,000 customers in the UK.
Providian, once the leading US credit card issuer, has been laid low by rising charge-offs and loan losses resulting from an aggressive Internet expansion strategy. It recently offloaded an $8.2 billion upscale card portfolio to JPMorgan Chase and yesterday announced the resignation of its chief financial officer as it warned of a further increase in monthly loan loss rates.
Last week, Barclays reported divisional operating profits for Barclaycard of £555 million for 2001, up 20 per cent against the previous year, within the overall Barclays Group results.
Gary Hoffman, Barclaycard chief executive, says: “This is a major development for our business...The acquisition of Providian will extend our customer base and provide us with additional expertise in key areas including information based customer management."
The deal, which industry sources value at approximately £454 million, is expected to be completed in the second quarter of this year.