The ongoing crisis in Argentina has led observers to focus more closely on
what has long been considered one of the strengths of the Argentine economy,
its banking system. In an earlier comment (`Fitch Comments on Argentine Banking
System Amid Tumultuous Markets’, July 31, 2001), Fitch, the international
rating agency, had reviewed the many reforms and the consolidation that
contributed to a substantial strengthening of the Argentine banking system
since the severe pressures it felt in the wake of the 1994 Mexican devaluation.
In a subsequent comment issued today, Fitch has evaluated various scenarios for
the Argentine banking system over the coming months as the economy struggles to
return to sustainable growth under a heavy debt burden.

While banking sector reforms enacted over the latter half of the 1990s and
increased foreign participation have undoubtedly improved the system’s
strength, pressure has risen over the past year in parallel with deteriorating
sovereign creditworthiness. Argentina’s foreign currency credit rating was
downgraded to `B-`, Rating Outlook Negative in July and Fitch’s international
ratings on Argentine banks have also moved downward over the course of the last
year. Among these ratings are still strong support ratings for the subsidiaries
of major foreign banks.

Significantly, the banking system’s single largest exposure is to its own
government, and this has been the principal source of balance sheet expansion
during the prolonged recession. Thus, growing fears of sovereign default have
been accompanied by significant deposit flight – down 15% since their peak
earlier this year – funded by the outflow of an important portion of previously
comfortable liquidity reserves. Although deposit flight has been stemmed since
the announcement of enhanced financial support from the IMF in August, a large
portion of which was earmarked to restore banking system liquidity, the
potential for negative events to trigger further pressure on deposits still

As was the case in the 1995 Tequila Crisis, anecdotal evidence points to
institutional investors’ withdrawal of funds from the banking system as the
primary reason for the deposit fall. However, renewed falls are quite likely to
result in deposit flight quickly spreading to retail depositors, potentially
leading to a rapid snowballing which would renew the drain on liquidity. This
could force banks to look to their less liquid assets (loan and securities
portfolios) for the liquidity necessary to honor potential deposit withdrawals.
It is these very assets that have come most under stress as a result of
continuing economic stagnation.

The two asset classes most under stress in the current environment are:
–Credit extended to the Argentine national and provincial governments; and,
–Private sector loans in largely stagnant loan portfolios.

Of most immediate concern is exposure to the public sector, estimated at 174%
of equity for the system as a whole. While government securities are a
relatively small proportion of total bank assets, total public sector exposure
also includes loans to the provinces secured by future tax flows and is a much
greater proportion of balance sheets. Even for the most conservative banks it
exceeds current levels of equity and is particularly pronounced for banks in
the public sector, at 271% of equity, compared with 148% for private banks.
Banks would be directly affected by any restructuring of existing debt, with
any potential reduction (or `haircut’) likely to absorb an equivalent part of
banks’ equity bases. Lengthy grace periods on new classes of government debt
would reduce banks’ cash flows, and negatively affect the ultimate liquidity of
such securities. Fitch believes such events may lead to continued regulatory
forbearance as to bank accounting, which could hide the potentially significant
reduction in the cash flows available to the banks and in the realizable value
of these assets. Much of the public sector exposure in bank portfolios is in
the form of advances made to provinces against the flow of tax payments to the
provinces, and a reduction of such flows, as currently being contemplated, will
certainly mean, at least, a significant rescheduling of current terms on these
exposures; again, potential losses in value of these exposures could translate
to hits against current equity bases.

Adding to the potential pressure on the banks from their public sector
exposures is what will certainly be pressure on the asset quality of existing
loan and contingent exposures to the private sector, as the prolonged recession
is made sharper by recent events, and the return to sustainable growth appears
to be still some time off. Published figures through 30 June, 2001, have not
shown evidence of substantial credit quality deterioration, with loan
portfolios already tested and seasoned by the prolonged recession. However,
Fitch expects pressure on credit quality to persist, as evidenced by some
well-publicized bankruptcies among higher profile corporate credits.

The precise behavior of impaired loans in coming months is impossible to
predict. However, recent banking crises in Mexico in 1995 and in Asia in 1997-9
give some indication of the potential for impaired financing to increase. Fitch
has therefore analyzed the impact of a doubling and tripling of impaired loans
as a way of illustrating the potential stress on the system. A doubling of
impaired financing would take them to 25% of total financing, around the level
reached in Asian countries less badly affected by the Asian crisis, such as
Malaysia. A tripling would represent a more serious outturn, such as
experienced by Thailand. As regards the public sector banks, were gross
impaired financing to double (x2), that sector’s gross exposure would equate to
US$12.5 billion (EUR13.7 billion), or 295% of equity (compared to 87% for
private banks and 136% for the system). A tripling of gross impaired financing
would increase the public banks’ gross impaired financing to 442% of equity
(compared to 130% for private banks and 204% for the system). The public banks
appear to have little cushion to absorb an inevitable increase in problem
assets. The private sector banks, which have generally been aggressive in
maintaining or increasing reserve levels and in attacking their stock of
impaired loans with heavy chargeoffs, appear to be much better positioned to
absorb substantial increases in impaired credits in the private sector,
although a haircut to government exposure combined with a substantial increase
in impaired loans could also lead to significant hits to equity
Fitch points out that the impact of a devaluation of the Argentine peso would
be even more damaging. Although such an option has been ruled out by the
government and will be strongly resisted, such an outcome cannot be entirely
discounted. Any devaluation would likely be substantial, and given that nearly
75% of total loans are extended in US dollars, with over 90% of the systems’
portfolio of securities also denominated in dollars, the effects of a
devaluation would be very damaging and place further pressure on an already
strained banking system.

FCNB & CardSite

Incurrent Solutions, Inc., the leading provider of on-line cardmember self-service solutions to credit card issuers and transaction processors, announced that First Consumers National Bank, a subsidiary of Spiegel, Inc., is now utilizing Incurrent’s CardSite platform to deliver online customer self-service at [][1]. Managing receivables of over $3.3 billion, FCNB is the 24th largest bank credit card issuer in the nation(1) and is the nation’s tenth largest issuer of private-label credit cards(2). FCNB provides credit card services to a nationwide customer base of secured and unsecured MasterCard and Visa accounts, as well as to Spiegel, Eddie Bauer, Newport News, and Crate and Barrel customers.

“Our strategic objectives focus on providing diverse, value-added products to our customers that bring convenience to the shopping process,” said Greg Aube, FCNB’s President and CEO. “We offer a wide variety of choices to meet the specific needs of our customers and now, by teaming up with Incurrent, we are able to offer a higher level of convenience to our customers through the Internet.”

FCNB’s CardSite customer self-service solution gives its bankcard and private-label credit customers full access to their balance information in real time through the FCNB Web site ([][2]). In addition to being able to view their transaction history online, customers also have the ability to perform sort and search functions on their transactions. Some other self-service features include online address changes and requests for credit limit increases.

“Incurrent is delighted to play a key role in creating FCNB’s online customer self-service solution,” said Loren Hulber, Incurrent’s President and CEO. “FCNB is an unique financial institution that serves a diverse mix of bankcard and private-label credit customers. Working together, we have created a content-rich Web site that will provide FCNB’s customers with a convenient choice while helping FCNB reduce its customer service costs.”

FCNB Chooses CardSite for Quick Deployment and Advanced Technology

Before selecting CardSite as its customer self-service platform, FCNB examined several vendors’ products as well as the possibility of building in-house technology. “Our decision to use Incurrent Solutions was based upon its business model of offering a complete turnkey operation. In addition, Incurrent has a solid understanding of bank requirements and it offered flexibility in meeting our needs,” said Don Sasaki, Vice President of the Internet Group for FCNB. “We began working with Incurrent in March. By August, we were up and running with a redesigned site, complete with new content and functionality. With Incurrent, we’re dealing with a highly experienced group that can provide the latest technology. This decision also gave us the ability to introduce new customer self-service functionality without having to buy equipment and hire and train new personnel to manage it.”

CardSite provides FCNB bankcard and private-label credit customers with the ability to:

— View transaction detail with up to twenty-four months of account history — Statement-sort by expense categories, merchant, or description with printable reports — Query for individual transactions or other transaction history — View charts of spending patterns — Set up e-mail alerts for designated account conditions or events — Submit a change of address online — Submit an online request for a credit limit increase

About Incurrent Solutions

Founded in 1997, Incurrent Solutions ([][3]) provides advanced online cardmember self-service solutions to credit card issuing banks, retailers, and transaction processors. Incurrent’s clients include Sears, MBNA, Fleet Credit Card Services, NextCard, Metris Companies, Certegy, Fiserv, and other major card issuers. The volume of cardholder accounts serviced on Incurrent’s CardSite(TM) platform has grown from 15 to 100 million in less than year, reflecting a rapidly growing card industry demand for the valuable customer service extension CardSite provides to issuers.

CardSite is a cutting-edge, e-service solution that greatly enhances the cardholder’s online service experience, resulting in increased retention at a cost significantly lower than traditional customer interaction methods. Cardholders enjoy access to real-time account information, statements, bill payment, secure e-mail, reports, searches, and other service-enhancing tools.

About FCNB and The Spiegel Group

The Spiegel Group is a leading international specialty retailer marketing fashionable apparel and home furnishings to customers through catalogs, more than 580 specialty retail and outlet stores and eight e-commerce sites, including, and The Spiegel Group’s businesses include Eddie Bauer, Newport News, Spiegel and First Consumers National Bank.

A national bank specializing in the issuance of credit cards, First Consumers National Bank (FCNB) plays a dual role within The Spiegel Group, supporting the marketing efforts of the Group’s merchant companies with private-label credit programs and offering unique bankcard credit programs that target under-served market niches. FCNB’s Web site address is [][4].



Oberthur Card Systems received its first order to
provide smart Visa cards for Providian Financial Corporation. “Providian,
which issued its one millionth smart Visa card in June 2001, is one of the
first banks in the United States to issue smart Visa cards.

“Providian is a clear leader in the Smart Visa push and is building strong
ties to its existing customers while paving a road to a new generation of Visa
customers,” noted Philippe Tartavull, president & CEO of the American division
of Oberthur Card Systems. “Oberthur has extensive experience with large scale
deployment of smart cards and is very pleased to become one of the suppliers
who will assist Providian in advancing smart cards in the U.S.”

The smart Visa card enables Visa financial institutions to combine the
purchasing power of traditional payment cards with smart chip technology to
offer added security, utility and convenience to consumers. With the growth
in e-commerce, new and technologically-enhanced payment products such as the
Smart Visa card will meet the evolving needs of consumers for greater
convenience, control and highly personalized services. Visa projects there
will be about seven million ‘smart Visa’ cardsinforce by year’s end among all
of its current issuers.

“As one of the country’s leading issuers of Visa cards, we are glad to
welcome Oberthur on board the Providian smart Visa program,” said Elizabeth
Tse, senior vice president at Providian. “Their experience and breadth of
knowledge in the financial services market was a key factor in our decision to
work with Oberthur.”

About Oberthur Card Systems

Oberthur Card Systems (Paris Stock Exchange – Code SICOVAM 12413), a
global leader and the innovator in the smart card industry, is shaping the
future by offering the ultimate in SIM, WAP, 3G (IMT-2000/UMTS), e-wallet
technologies & Internet-based card management services coupled with a firm
commitment to open standards.

Championing EMV migration, Oberthur is the world’s #1 supplier of
MasterCard and Visa cards, #1 in banking, e-commerce, m-commerce and pay-TV,
Oberthur is also the #1 in Java(TM) and GSM technologies.

Oberthur Card Systems has an international reach ensured by 30 sales
offices and 20 manufacturing sites across the five continents. Oberthur Card
Systems had sales of 451.1 million Euros in 2000.

About Providian Financial

Winner of the 2001 Rochester Institute of Technology/USA Today Quality Cup
for excellence in customer service, San Francisco-based Providian Financial
( is a leading provider of
lending and deposit products to
customers throughout the U.S., and offers credit cards and deposit products in
the U.K. and Argentina. Providian Financial has been named one of America’s
Most Admired Companies in a survey by Fortune magazine, one of the nation’s
top financial institutions by U.S. Banker magazine, and one of the most
technologically innovative companies in the U.S. by Information Week magazine.
The Company has more than $36 billion in assets under management and over
18 million customer accounts.

Cap One Biz Awards

Capital One Financial Corporation announced it has been recognized as one of the most innovative users of information technology by InformationWeek magazine for the fourth year in a row and by Darwin magazine in the debut of its “Fittest 50.”

“These awards recognize Capital One’s leadership position in applying technology to marketing financial services,” said Nigel Morris, President and COO. “It’s a testament to Capital One’s entrepreneurial culture, created to foster continuous innovation by our 20,000 associates.”

The 13th annual InformationWeek 500 lists the most innovative users of information technology — companies that are considered masters in combining information technology and business savvy to build profitable and successful customer relationships. InformationWeek ranks companies on both the size and complexity of installed information technologies, as well as on the tangible business benefits created by technology.

Darwin’s Fittest 50 are chosen based on their ability to use IT to adapt, survive and thrive in a changing economy. Nominations by a panel of 15 experts, including academics and business consultants, as well as Darwin editorial staff, were narrowed down to the top 50 after extensive research by Darwin editorial staff.

“Capital One’s IT work is driven by our desire to deliver superior products, services and value for our 38 million customers,” said Marge Connelly, Executive VP, Domestic Card Operations and IT Operations. “This makes the Information Week and Darwin recognitions even more gratifying.”

Laura Olle, Senior VP Systems Development and Senior Business Information Officer, said: “Capital One’s culture of a true partnership between IT and the business means we have the in-house expertise to pull together in a spirit of collaboration and pursuit of a common goal.”

Capital One was recently recognized by another measure of information technology innovation — CIO 100, CIO magazine’s yearly list of the top 100 most innovative companies in the world.

Headquartered in Falls Church, Virginia, Capital One Financial Corporation ([][1] ) is a holding company whose principal subsidiaries, Capital One Bank and Capital One, F.S.B., offer consumer lending products. Capital One’s subsidiaries collectively had 38.1 million customers and $35.3 billion in managed loans outstanding as of June 30, 2001. Capital One, a Fortune 500 company, is one of the largest providers of MasterCard and Visa credit cards in the world. Capital One trades on the New York Stock Exchange under the symbol “COF” and is included in the S&P 500 index.



Hudson’s Bay Company launched a single HBC
credit card that is accepted at the Hudson’s Bay Company (HBC) family of
stores – the Bay, Zellers, Home Outfitters and; as well as 2300 Esso
stations across Canada.

The HBC card will replace existing Bay and Zellers cards, allowing
customers to use one easy method of payment. As of today all new successful
credit card applicants will receive the HBC credit card. By the end of 2002,
all cardholders will be migrated to the HBC credit card. The Company currently
has over five million cardholders.

“The introduction of the single HBC credit card provides Hudson’s Bay
Company’s customers with an easy rewarding payment option when transacting in
any and all of our family of stores,” said Stephen Knight, Vice President,
Credit & Loyalty, Hudson’s Bay Company. “Based on a single HBC view of the
Canadian customer and marketplace, which is core to our strategy, providing a
common credit facility to our customers is both a logical and necessary step
forward for the Company. It serves to increase card functionality while
reducing the number of plastics in the customer’s wallet.”

Through its retail formats Hudson’s Bay Company strives to meet the
majority of Canadian shopping needs. The HBC credit card is an important
strategic element in linking the Company’s multiple retail formats with
customer bridges. In the Fall of 2000, Hudson’s Bay Company launched credit
card reciprocity, allowing customers to use their Bay and Zellers credit cards
in all of the Hudson’s Bay Company family of stores. In May 2001, the Company
launched HBC Rewards, a loyalty program built to reward those customers who
shop any and all of Hudson’s Bay Company’s retail formats. The introduction of
the single HBC customer credit instrument is the latest initiative to support
the Company’s strategy of providing Canadians with a single shopping solution
through HBC’s multiple retail formats.

Hudson’s Bay Company has offered Canadians unique and innovative methods
of payment from beaver pelts to credit cards since the Company was
incorporated in 1670. The HBC Credit Card allows customers to make payments to
suit their budgets and provides customers with exclusive merchandise
promotions and payment options. HBC credit cardholders earn 25 HBC Rewards
bonus points on every dollar of purchases made on their credit card at any of
the 500 Hudson’s Bay Company family of stores and 2300 Esso stations across
Canada and maximizes the number of points a customer can earn on their

The launch of the HBC credit card will be supported by an in-store
marketing campaign in all of the Hudson’s Bay Company family of stores.

Hudson’s Bay Company, established in 1670, is Canada’s largest department
store retailer and oldest corporation. The Company provides Canadians with the
widest selection of goods and services available through numerous retail
channels including more than 500 stores led by the Bay and Zellers chains.
Hudson’s Bay Company is one of Canada’s largest employers with 70,000
associates and has operations in every province in Canada.

MBNA 3Q/01

MBNA reported third quarter net income of $478.3 million, an increase of 25.6% compared to 3Q/00. However managed charge-offs have increased 26% since last year, climbing from 3.88% to 4.90%. Reported delinquency for 3Q was 4.23% compared to 4.65% last year, however the 3Q/01 delinquency figure was skewed by the special treatment of accounts affected by the Sept 11th events. Discounting the special account treatment, MBNA says the actual delinquency would probably fall between 4.85% and 4.95%. Total managed loans at Sept. 30 stood at $92.6 billion. Charge volume was up 14%, from $35.9 billion for 3Q/01 compared to $31.4 billion for the same quarter one year ago. During the second quarter MBNA signed up 2.4 million new accounts or 3.2 million new cardholders. The issuer signed up 250,000 new cardholders via the Internet during the third quarter. During the third quarter MBNA acquired 102 new affinity agreements with a variety of organizations in the USA, UK, and Canada. MBNA’s online account access now serves more than 4.8 million customers. For complete information on MBNA’s third quarter results visit CardData ([][1]).



MasterCard reported performance results for the first six months of 2001
demonstrating continued strong performance in the company’s key markets and
across a variety of measures of success in the payments industry*.
During the first half of 2001, financial institutions increased their issuance
of MasterCard cards around the world at the highest rate in 10 years. At June
30, 2001, member institutions reported that they had issued 475.3 million
cards, an 18.6% increase over June 30, 2000, when members reported that 400.9
million MasterCard cards were issued.

In the critical U.S. market, the number of cards issued at the end of June
jumped 20% — almost twice the growth rate reported for the same period a year
ago — to 256.2 million. At the end of June 2000, the number of cards issued in
the U.S. stood at 213.5 million, which represented a 10.7% year-to-year gain.
Cardholders around the world used MasterCard-branded cards to generate $458.8
billion in gross dollar volume (GDV) during the first six months of 2001, a
17.6% increase from the $405.3 billion of GDV generated in the first half of
2000. During the second quarter of 2001, GDV reached $238.5 billion, up 16.7%,
marking the 9th consecutive quarter in which MasterCard’s GDV grew at
double-digit rates.

The value of purchases on MasterCard cards, a key measure of success, continued
to show significant gains. Globally, purchase volume (excluding cash
transactions) rose 14.7% in the first half 2001, to $332.4 billion, and 14.4%
in the second quarter of 2001, to $173.1 billion, in each case as compared to
the same period in 2000.

In the first half of 2001, MasterCard-branded cards, excluding on-line debit
programs, were used for almost 4.82 billion purchase transactions, a 17.5%
increase over the same period in 2000. Second quarter transactions were up
16.9% to 2.54 billion compared to the second quarter in 2000.
By the end of June 2001, member financial institutions reported that
cardholders could use their MasterCard cards at a record 22.4 million
acceptance locations around the world, 16.8% more than at the end of the first
half of 2000. MasterCard’s efforts to ensure that no card is accepted in more
places or by more merchants have resulted in the number of acceptance locations
increasing over 50% in the past five years.

Strategy Shows Resilience in Changing Economy

“Several years ago, we embarked on a new corporate strategy aimed at focusing
on our customers, strengthening our core products and services, and
differentiating ourselves from the competition, by building customized,
value-added services,” said Robert W. Selander, MasterCard’s president and
chief executive officer. “This strategy has proved its resilience in a changing
global economy, and our results demonstrated continued strong growth during the
first half of the year, as economies of the world slowed.”
“No one yet knows what impact the tragic attack on the World Trade Center and
the Pentagon will have on short-term economic activity in the U.S. or across
the globe. But we intend to work hard to ensure that when our members and their
customers look for an alternative to cash and checks, MasterCard is their brand
of choice,” he added.

Mr. Selander also said that MasterCard’s recently-announced conversion to a
private share corporation, through which the association’s principal members
will become its shareholders, should have important long-term advantages by
more closely aligning the interests of MasterCard with the interests of its
members. “By supporting the MasterCard brand, our shareholders will be
supporting their investment in our company,” he said.

Along with its conversion to a share company, MasterCard will integrate with
Europay, its long-term strategic partner in Europe, into a global entity under
a single management team and governance structure. Mr. Selander said,
“Integration with Europay will make us a stronger organization, able to better
serve our member financial institutions, whether they operate in one country,
one region, or in markets across the globe. It will bring together MasterCard’s
award-winning marketing expertise and strength in e-commerce and processing
technology with Europay’s particular strengths in debit, chip and m-commerce.”

United States Results

In addition to the exceptional growth in card issuance, U.S. GDV showed
continued strong growth, increasing 17.6% year-to-year, to $234 billion, in the
first half of 2001, and 18.3% to $124.4 billion in the second quarter of the
year compared with the like periods in 2000. U.S. purchase volume jumped almost
18%, to $179.2 billion, in the first half of 2001, and 18.9%, to $95.6 billion
in the second quarter. At the end of 2001’s second quarter, U.S. outstandings
on MasterCard cards, rose to $223.9 billion, an 18.5% increase over the like
2000 period.

Ruth Ann Marshall, president, MasterCard North America, said, “We’re proud of
the enormous growth in MasterCard’s U.S. region. With each passing quarter
we’re seeing our customers rewarding us for being the best business partner in
the payments industry. They recognize that we’re constantly looking for ways to
make their payments businesses more profitable by supporting both traditional
payments programs and looking for innovative new ways and places to pay, in
both the virtual and real worlds.”

Strong Global Results, Card Growth Highest in a Decade

Strong GDV growth was reported across the globe: Asia/Pacific was up 21.3% for
the first half of the year, and 16.8% during the second quarter; North America
rose 17.5% in the first six months of the year, and 18.1% during the second
quarter; Latin America was up 20.4% in the first half and 21.4% for the second
quarter; in the MiddleEast/Africa region, GDV rose 18.0% in the first half of
2001, and 16.5% in the second quarter. In Europe, through its alliance with
Europay International, GDV on MasterCard-branded cards rose 14.0% in the first
half of 2001 and 12.6% in the second quarter. All of these increases are
compared to GDV in the applicable period in 2000.

Throughout the first six months, MasterCard cards were issued in significant
numbers across the globe.

By the end of the second quarter in 2001, the number of cards issued in North
America increased 19.7% to 275 million at the end of the second quarter of
2000. In the Asia/Pacific region the number of MasterCard cards stood at 92.2
million at the end of the second quarter, a 20% increase over the same period
in 2000. In Latin America, cards issued rose 17.9% to 32.5 million, and in
Europe the number of cards issued stood at 73 million, a 13.5% gain, in each
case during the second quarter of 2001 as compared to the same period in 2000.

About MasterCard

MasterCard International has a comprehensive portfolio of well-known, widely
accepted payment brands including MasterCard(R), Cirrus(R) and Maestro(R). More
than 1.7 billion MasterCard, Cirrus and Maestro logos are present on credit,
charge and debit cards in circulation today. An association comprised of more
than 20,000 member financial institutions, MasterCard serves consumers and
businesses, both large and small, in 210 countries and territories. MasterCard
is a leader in quality and innovation, offering a wide range of payment
solutions in the virtual and traditional worlds. MasterCard’s award-winning
Priceless(R) advertising campaign is now seen in 80 countries and in more than
36 languages, giving the MasterCard brand a truly global reach and scope. With
more than 22 million acceptance locations, no card is accepted in more places
and by more merchants than the MasterCard Card. At June 30 2001, gross dollar
volume exceeded US$458 billion.

ADS Signs ShopNBC

Alliance Data Systems Corp. announced that it has signed a multi-year agreement to provide a full-service private label credit card program to ShopNBC, along with special card benefits to customers. ValueVision Media owns and operates the national shopping network.

The agreement between Alliance Data and ShopNBC is geared toward increasing ShopNBC sales via its cable/satellite and online channels while also providing strategies for building and improving the relationship with its customer base. Alliance Data will provide private label credit card services including account acquisition and activation; card issuance; credit approval; payment processing; statement generation; and customer service. Additionally, Alliance Data will use its significant retail experience to assist ShopNBC in developing and executing a customized marketing program, including incentives and other special promotions, designed to increase customer loyalty and incremental sales.

“We are both proud and excited that ShopNBC selected Alliance Data to provide the critical services needed to strengthen and expand the base of loyal customers for their network,” said Ivan Szeftel, president, retail credit services, Alliance Data Systems. “The home shopping industry is competitive and continues to grow at a strong pace. We are confident that Alliance Data can offer the business solutions needed to increase ShopNBC’s competitive edge and strengthen its customer relationships.”

Dick Barnes, COO and CFO of ShopNBC, said that by teaming with Alliance Data, the ShopNBC brand can be enhanced.

“We recognized that in order for our strategy of utilizing converged media to continue our growth in the broadcast and online arenas, we had to further our commitment in delivering the services that are most meaningful to our consumers,” said Barnes. “By utilizing Alliance Data’s marketing capabilities and impressive customer care services in support of a private label credit card, we will strengthen the relationship with our customers while also creating greater brand visibility for ShopNBC.”


ShopNBC is a leading national shopping network, formerly known as ValueVision TV, that is owned and operated by ValueVision International, Inc. (Nasdaq: VVTV). ValueVision operates in the home shopping industry, which is approximately $5 billion in size and growing, and is capitalizing on the convergence of television, the Internet and commerce. The Company’s mission is to be the most innovative multimedia network offering consumers an entertaining, informative, and interactive shopping experience. GE Equity and NBC own approximately 40 % of ValueVision. As the nation’s third largest and fastest growing shopping network, ShopNBC is broadcast 24 hours a day, 365 days a year and is simulcast live on the Web at and on Yahoo! ShoppingVision. As of April 30, 2001, ShopNBC reaches about 48 million cable and satellite households (DIRECTV; DISH).

Alliance Data Systems

Based in Dallas, Alliance Data Systems (NYSE: ADS) is a leading provider of transaction services, credit services and marketing services, assisting retail, petroleum, utility and financial services companies in managing the critical interactions between them and their customers. Additionally, Alliance Data operates and markets the largest coalition loyalty program in Canada. All together, each year, the company manages over 2.5 billion transactions and 72 million consumer accounts for some of North America’s most recognizable companies. Alliance Data Systems employs approximately 6,000 associates at more than 20 locations in the United States, Canada and New Zealand. For more information about the company, visit its web site, .


CIBC Aerogold VISA, Canada’s most successful
gold card, has made a substantial donation of Aeroplan miles to Médecins Sans
Frontières/Doctors Without Borders Canada. The donation of 5 million
Aeroplan miles to the international aid organization will assist MSF to
transport volunteer medical personnel to stricken areas throughout the world
and should cover a large portion of MSF’s air travel needs for the year 2002.

Launched in October 1991, CIBC Aerogold offers cardholders the
opportunity to fly for free by accumulating one Aeroplan mile for every dollar
spent on the card. “Our cardholders know the value of collecting Aeroplan
miles for travel,” said Kathy Buckworth, Director, Cobrands, CIBC VISA. “At a
time when Médecins Sans Frontière’s medical care for people affected by war,
civil strife, epidemics and natural disasters is sorely needed, CIBC is
pleased to donate five million Aeroplan miles to help out.”

The presentation of a giant Air Canada boarding card which represented
the five million Aeroplan miles was made by Ernie Johannson, Vice President
CIBC VISA and Suzanne Wilcox, Manager of Strategic Partnerships, Aeroplan to
David Morley, Executive Director of Médecins Sans Frontières at a reception
which included a preview of MSF’s “Refugee Camp in the City” exhibit. The
exhibit is touring Canada in 2001 and will be in Nathan Phillips Square,
Toronto from October 11-15 before moving on to Vancouver.

“This generous donation will make a real difference to our work,” said
David Morley, Executive Director of MSF Canada. “It is expensive to send out
Canadian volunteers to projects around the world and we are grateful to CIBC
Aerogold for helping us defray these costs.”

CIBC and Air Canada’s Aeroplan division created CIBC Aerogold VISA in
1991. CIBC is Canada’s No. 1 credit card issuer and its partner, Aeroplan, is
one of Canada’s largest customer loyalty programs.

US Smart Cards

The total number of smart cards manufactured for use within the USA and Canada last year hit 28,430,000, a 37% increase over 1999. The fastest growing market segment between 1999 and 2000 was the financial market sector with a growth rate of 244%. According to a report from the Smart Card Alliance, the areas that experienced significant microprocessor card growth rates between 1999-2000 include: corporate campus use, up 125%, education campus use, up 116%, and wireless use, up 89%. The SCA full report titled, “United States and Canada Smart Card Shipment Survey,” will include data from 2001 and will be available in the first quarter of 2002.


High-end specialty toy retailer, FAO Schwarz is set to offer a customized home ATM this holiday season for $20,000. The Fall catalogue was published this week and is now en route to six million FAO Schwarz customers across the USA. NJ-based Access To Money will provide and install the ‘Triton 9600′ ATM for FAO Schwarz at purchasers’ homes, and will personalize the ATM with panels bearing personalized labels and insignia. Purchasers receive ten functional ATM cards, which may be used to dispense real or play money at the buyer’s option. If a customer chooses to operate the ATM as part of an actual ATM network, Access To Money will also provide processing and support services for any location in the continental United States or Hawaii.

Providian Cracks

Providian acknowledged late last night that 3Q earnings, to be released next Thursday, will be much lower than previously projected. The company now says it expects third quarter earnings to be in the range of $0.19 to $0.21 per diluted share rather than Sept. 4th guidance of $0.82 to $0.84 per diluted share. The managed net charge-off rate is expected to be approximately 10.33% for the quarter. Providian says the earnings decline is due to actions taken to strengthen the balance sheet in anticipation of continued weak credit conditions, lower than expected fee and finance charge revenue in September, and higher than expected credit losses in September. In pre-market trading Providian stock was offered at $15.00 per share compared to yesterday’s close of $20.35. (CF Library 9/4/01; 9/20/01 10/04/01)