BofA dropped by Sallie Mae as Barclays wins college card
BANK of AMERICA Corp. divested a $1.3 billion credit-card portfolio after SLM Corp. chose Barclays Plc. for its college-savings program.
BLOOMBERG FILE PHOTO/JIN LEE
By Margaret Collins and Hugh Son
NEW YORK - Bank of America Corp., the second- biggest U.S. lender, divested a $1.3 billion credit-card portfolio after SLM Corp. chose Barclays Plc. for its college-savings program.
“We thought Barclays offered us a better overall execution,” Joe DePaulo, SLM’s chief marketing officer, said yesterday in an interview. “This is a step up.”
Bank of America’s rivals are benefiting as the Charlotte, N.C.-based firm retrenches in businesses including credit-card and mortgage lending.
Outstanding card loans dropped 7.9 percent to $112.6 billion last year, the biggest decline among the 10 largest U.S. issuers, according to the Nilson Report, an industry newsletter. U.S. credit-card loans at London-based Barclays jumped 17 percent to $12.2 billion.
SLM, known as Sallie Mae, had opportunities to renew with Bank of America or explore other deals, DePaulo said. The Newark, Delaware-based student lender has teamed with banks since 2001 to help families fund education costs with credit- card rewards. It offers the card through its Upromise Inc. unit, and its Upromise Investments Inc. division is the largest U.S. administrator of 529 college-savings plans.
Tony Allen, a Bank of America spokesman, declined to comment on the decision. The bank’s focus is on customers who use multiple products, and that’s why it sold credit-card portfolios affiliated with Regions Financial Corp. and Sovereign Bank last year, Allen said.
“These kinds of relationships are predominantly single- service card customers with real limited opportunity for us to deepen relationships,” he said. “That turned out to be the case with Upromise as well.”
The move is Bank of America’s latest to shed part of its credit-card business, most of which was acquired in the 2006 takeover of MBNA Corp. Last year, the lender agreed to sell its Canadian unit and said it was exiting card operations in the U.K., Ireland and Spain. Revenue at Bank of America’s credit- card unit slid 19 percent to $18.1 billion last year amid new U.S. regulations limiting fee income. In April, the business was merged with deposit and small-business units into a new division overseen by co-Chief Operating Officer David Darnell.
Sallie Mae’s partnership with Barclays’s U.S. payments unit will offer customers better products, rewards and service, DePaulo said. Upromise sent letters to cardholders this week alerting them of the change and it announced the new product in a statement today.