BankBoston, Bank of Montreal/Harris Bank and consulting firm First Annapolis opened the curtain yesterday on a new joint venture that will combine the existing U.S. card portfolios of BankBoston and Harris Bank with the management and marketing savvy of First Annapolis. The firms expect to close the deal by Nov. 30 and they project the newly formed entity will be among the fifteen largest U.S. card portfolios by the year 2000. Under terms of the agreement: BankBoston will contribute most of its $1.4 billion portfolio in exchange for $5 million in cash, $50 million in preferred shares and 19% of the common shares of the new entity (BankBoston will retain its regional portfolio cardholders); Bank of Montreal/Harris Bank will contribute most of Harris Bankâs $782 million portfolio and $115 million in cash in exchange for a 69% ownership; and First Annapolis will contribute its subsidiary First Annapolis Marketing Information Services, Inc. in exchange for a 12% share of the new company. The yet to be named company has also designated First Data Resources as its provider of data processing, customer service, credit and collections support. In making the announcement Thursday the three firms indicated they see the current shakeout in the market as an opportunistic time for alliances and acquisitions. They also believe the key to future profitability in the card business is data mining and economies of scale. First Annapolis approached between eight and ten issuers with the concept, landed two, and expects to announce a third partner next year. Bank of Montreal says they would like to eventually reduce their ownership to about 35%. The new company expects to go public in 2 years.
PARTNERâS MID-YEAR PORTFOLIO SNAPSHOT
ISSUER RECV YTD VOL ACCTS ACTIVES CARDS
BankBoston $1.4b $2.8b 1.2m 725k 1.2
Harris Bank $782m $672m 1.2m 474k 710k
Source: CardData/Bankcard Update