Providian Financial Corp. is bolstering its credit card growth strategy with two executive appointments.
James H. Rowe, the San Francisco card issuer's investor relations officer, was named senior vice president in charge of a new unit, fee-based products.
John Clark, an investment banker with expertise in credit card portfolio acquisitions, joined Providian from Salomon Smith Barney as senior vice president of corporate development. He said he will "focus full-time" on identifying appropriate portfolios for Providian to acquire.
At Salomon, Mr. Clark worked under Hans Morris, who has been involved in some of the largest credit card portfolio sales. Providian got into that game in December, agreeing to acquire $1.1 billion of receivables from a First Union Corp. subsidiary.
"It is fair to say that the First Union deal is indicative of what we will be doing," Mr. Clark said.
Providian ranks 12th among credit card issuers, with $8 billion of receivables, not including First Union's, according to The Nilson Report. Mr. Clark will be taking on some of Mr. Rowe's former duties, which included identifying business opportunities for Providian.
Mr. Rowe will be responsible for developing new programs to appeal to various parts of its customer base. Providian already offers automobile- and health-related discount services, and it hopes to generate more profits along similar lines.
Such proprietary products are becoming a larger part of Providian's bottom line, according to analysts. Mr. Rowe, however, would not disclose Providian's fee-related profits.
The executives are on two sides of a common path. Mr. Clark aims to bring in new customers, and Mr. Rowe said he will concentrate on "deepening existing customer relationships."
Mr. Rowe said his new role "formalizes" Providian's commitment to broadening its product line.
"We are trying to bring a long-term strategic direction" to product development, he said. Providian has offered and developed its own products since 1989.
Providian's biggest programs are Drive Pro, which offers auto-club-type benefits, and Providian Health Advantage, for discounts on prescription drugs. Both are popular among secured card customers, who put money in deposit accounts as collateral for credit lines. Mr. Rowe will also focus on selling these products to conventional card borrowers.
Susan L. Roth, an analyst at Donaldson, Lufkin & Jenrette Securities, said Providian could generate more fees if it had more products to sell to secured card customers, many of whom do not have banking relationships. She said 25% of those customers subscribe to products such as Drive Pro and Health Advantage and estimated that as many as 50% would sign up if there were a broader array of products.
Ms. Roth said that with the gross profit margin on fee-based products at 50%, by her estimate, "going forward, they are going to focus more intensely on their entire account base."
