American Express seeks to build up retail bank

Daniel Henry, Executive Vice President and Chief Financial Officer of American Express, speaks at the Reuters Global Finance Summit in New York, November 16, 2009.

NEW YORK (Reuters) - American Express Co (AXP.N) is planning to build up its online and mail banking business into a source of at least $10 billion of deposit funding, its chief financial officer said.

The bank, which American Express decided to start in December, has already begun assembling deposits. It should be able to reach the $10 billion mark in less than four years, American Express CFO Dan Henry said at the Reuters Global Finance Summit in New York.

American Express collects deposits through brokers, but is looking to increasingly collect deposits directly from customers. Those customer deposits were nonexistent earlier this year, and have since risen to be "more than the hundreds of millions of dollars," Henry said.

The company for a long time relied almost exclusively on the bond markets to fund itself. But after bond markets closed down during the credit crunch of 2007 and 2008, many financial companies sought to increase their reliance on deposit funding, which is less likely to dry up during tough times.

American Express became a bank holding company late last year, and received $3.4 billion in Troubled Asset Relief Program funds soon thereafter. The company repaid those funds in June, and bought back government warrants in July.

As of September 30, American Express had about $120.4 billion of assets, and $23.9 billion of deposits, mainly collected through brokers.

(Reporting by Dan Wilchins; Editing by Phil Berlowitz)