 Major credit card firms end dispute
(China Daily)
Updated: 2008-06-26 07:57
MasterCard Inc, the world's second-biggest credit-card network, agreed to pay as much as $1.8 billion to settle a complaint that it blocked banks from issuing American Express Co cards. The agreement will cost MasterCard about $1 billion over three years after taxes, the Purchase, New York-based company said yesterday in a statement. New York-based American Express, the third-largest credit-card network, said the payments will act as a cushion against borrower defaults, which are likely to be more than expected. American Express sued larger competitors MasterCard and Visa Inc in November 2004 after the US Supreme Court ruled they violated antitrust laws by preventing member banks from offering rival cards. Citigroup Inc and Bank of America Corp, the two biggest US banks, later agreed to offer American Express services. "The antitrust settlement we've reached with MasterCard provides us with a multi-year source of funds that should, among other things, help to lessen the impact of this weakening economic cycle," said American Express Chief Executive Officer Kenneth Chenault in a separate statement. Chenault also said that "business conditions continue to weaken in the US and so far this month we have seen credit indicators deteriorate beyond our expectations". American Express declined 1.5 percent to $41.46 in early trading at 9:02 am in New York. The company dropped 32 percent in the past year in New York Stock Exchange composite trading through Tuesday as borrowers struggled to repay debts. The decline compares with the 48 percent plunge at Capital One Financial Corp. and the 52 percent slide at Discover Financial Services. MasterCard gains MasterCard, which runs a network and doesn't extend loans to consumers, gained 73 percent over 12 months. The company added 3.2 percent in early trading. The US lost jobs in May for a fifth month and the unemployment rate rose by the most in more than two decades, signaling that the world's largest economy is stalling. Payrolls fell by 49,000 after a 28,000 drop in April, the Labor Department said on June 6. The jobless rate increased by half a point to 5.5 percent. American Express, based in New York, settled a suit with Visa, the largest network, for $2.25 billion in November. Agencies (China Daily 06/26/2008 page17) |
