| April 1
April 1 Wells Fargo & Co said on Tuesday
that it agreed to issue and service credit cards for retailer
Dillard's Inc, the latest move by the fourth-largest
U.S. bank to boost its card business.
Under a 10-year agreement likely to begin in the fourth
quarter of 2014, Wells Fargo will offer private label and
co-branded credit cards on behalf of Dillard's, taking over from
General Electric Co's consumer finance unit. Financial
terms of the deal were not disclosed.
Expanding the size of Wells Fargo's credit card business has
been a priority for top executives, who have focused on getting
more of their existing retail customers to open accounts and use
their cards more frequently.
The bank has some success to show for it: 37 percent of its
retail households had a Wells Fargo credit card at the end of
2013, compared with 27 percent at the end of 2011.
But the deal with Dillard's, a Little Rock, Arkansas-based
department store operator with fiscal 2014 revenue of about $6.7
billion, illustrates that the bank can also use its
relationships with existing commercial customers to boost that
Dillard's is a large banking customer of Wells Fargo, and
issuing cards branded for specific retailers who do other
business with the bank is a natural way for the credit card unit
to expand, said Tom Wolfe, Wells Fargo's executive vice
president for consumer credit solutions.
The San Francisco-based bank has lagged rivals like
Citigroup Inc. and Capital One Financial Corp in
issuing these private label cards, according to data from the
Nilson Report, an industry publication. But Wells Fargo hopes to
win more of this business in the future.
"This is one area that we'd like to spend some more time
expanding," Wolfe said.
Wells Fargo is not alone in wanting to boost its private
label business. GE's consumer finance unit, part of which filed
for an initial public offering in March under the name Synchrony
Financial, said in a March 13 securities filing that "the
competition for partners is intense and becoming more
competitive." Synchrony listed Wells Fargo as one of its primary
competitors in the private label credit card business.
Another area that Wells Fargo has identified as one where it
is "clearly underrepresented" in credit cards is among the
The bank announced a partnership with American Express Co
in August to provide more competitive rewards and
benefits to wealthy consumers. A full-scale launch of those
products is set to occur in the first half of 2014.
(Reporting by Peter Rudegeair; Editing by Steve Orlofsky)