HSBC acquires US credit card company Metris, consolidates position

HSBC acquires US credit card company Metris, consolidates position

	Published : Sat, 06 Aug 2005 09:05 By : Amy Watts Print this Story

NEW YORK: U.K. banking major HSBC is consolidating its reach in the U.S credit card industry. It is acquiring credit card company Metris Cos. for $1.59 billion (893 million pounds) in cash.

The deal will be through Prospect Heights, Illinois-based HSBC Finance, a unit of HSBC Holdings. HSBC Finance, set up through the acquisition of Household International Inc. in 2003, is currently the sixth-largest U.S. issuer of MasterCard and Visa cards, Minnesota's Metris is the 11th -- having $5.9 billion worth of managed credit card loans.

The bank can now extend its U.S. financial services franchise, already in the top 10. It has $1.47 trillion of assets, just below Citigroup Inc.'s $1.55 trillion.

The deal will ensure Metris shareholders receive $15 for each of their shares ( $911.1m in total), a 1 per cent premium over the stock's Wednesday closing price on the New York Stock Exchange. Private equity firm Thomas H. Lee Partners LP, which owns Metris' preferred stock, would receive $682.6 million.

The U.S. credit card industry had seen consolidation in the last two months. Bank of America Corp. has bought MBNA Corp. for $35 billion in June and Washington Mutual Inc. has agreed to buy Providian Financial Corp. for $6.45 billion.

The HSBC-Metris deal is expected to close in the fourth quarter of the current fiscal. It has to secure shareholder and regulator approvals. There is civil enforcement action pending against Metris before the U.S. Securities and Exchange Commission, which too needs to be resolved before the deal is formalised and sealed.

Metris, founded in 1994, specialises in sub-prime credit cards. It had reported a $32.5 million second-quarter profit.

Commenting on the acquisition, Bobby Mehta, chairman and chief executive of HSBC Finance, said the acquisition "deepens our capabilities to serve the full spectrum of credit card customers."