Signaling its intent to become an international credit card powerhouse, Bank One Corp. named two senior executives Friday to take responsibility for Europe and Canada.
Bank One, which is tied with Citigroup Inc. atop the ranking of U.S. credit card issuers, also said it plans to hire 1,600 people over five years in those regions.
The Chicago banking company tapped James Corcoran, formerly in charge of global sales delivery at Citigroup, to be chief executive officer of European operations, based in Cardiff, Wales.
Gary Heatherington, who was manager of MasterCard International's Canada region until a recent reorganization, was named chief executive officer of the Canadian division, based in Ottawa.
Bank One's international credit card group is part of its First USA cards division, which had $70 billion of credit card receivables at yearend 1998.
Several leading U.S. card issuers have gone abroad in recent years, mainly targeting English-speaking countries, but Bank One has not been a leader. In 1998 it opened beachheads in the United Kingdom and Canada, each with 175 workers.
First USA had "significant early success" in those markets, the unit's chairman, Richard W. Vague, said at a presentation to analysts last month.
Canada and the United Kingdom are "like any other market," Patrick M. Blewett, president of Bank One's international credit card group, said in an interview. "It's very competitive, but we do relatively well in competitive markets. We're having a lot of fun with this."
MBNA Corp. of Wilmington, Del., has offered credit cards in the United Kingdom since 1994 and opened an office in Canada in 1997. As of March 31, MBNA had $5.2 billion of foreign card loans. It has established marketing affiliations with more than 700 organizations.
Capital One Financial Corp. of Falls Church, Va., opened shop in Nottingham, England, last year. By the end of 2000, Capital One said, it plans to have recruited 1,200 employees and invested $83 million in its operations center there.
"Bank One wants to be a player on a worldwide basis," competing on a par with Citigroup and American Express, said James Shanahan, principal of Business Dynamics Consulting Inc. in Newark, Del.
Last September, in its first survey of credit card solicitations mailed by U.S. issuers in Canada and the United Kingdom, BAIGlobal Inc. found that MBNA and Capital One had sent 65% of the offers. First USA-the largest mailer in the United States-did not register in the survey, according to the Tarrytown, N.Y., market research firm.
In September, when Bank One announced it would open overseas card operations, chairman and CEO John B. McCoy described international markets as "significant growth opportunities." The hiring of Mr. Corcoran and Mr. Heatherington is a tangible sign of Bank One's seriousness.
Industry experts said the move would probably intensify competition to develop card products abroad and to form partnerships with groups that could help introduce cobranded and affinity cards.
First USA chalks up much of its domestic success to myriad partnerships with colleges, professional groups, and other organizations. Alliances with six of the top Internet sites have put it ahead of other issuers in on-line marketing.
"Consumers have unique interests that are not met by a mass-market product," Mr. Vague said at the analysts' meeting.
Mr. Corcoran and Mr. Heatherington officially joined Bank One this month, reporting to Mr. Blewett.
Mr. Corcoran, 45, came to Citigroup a year ago from the worldwide consumer division of International Business Machines Corp., where he spent three years as general manager of marketing and sales. Earlier he spent 15 years at American Express Co.
Mr. Heatherington, 44, was senior vice president and general manager of MasterCard's Canada region. In a redeployment of executives last month, MasterCard had assigned him to handle the concerns of the 40 largest issuers in the association that are not represented on its board.
Before his six years at MasterCard, Mr. Heatherington had worked in Canadian financial institutions, including National Trust Co. and Bank of Montreal.
In the eyes of U.S. card issuers, profit margins "promise to be fatter abroad," said David Robertson, president of The Nilson Report, an industry newsletter based in Oxnard, Calif. "The U.S. is inevitably going to be a market where margins are squeezed, and profit will be made from scale only. That won't be the case abroad."
Mr. Robertson said U.S. issuers are on relatively familiar ground in English-speaking countries but will inevitably enter other countries where both language and the popular preference for debit cards will pose barriers.
"The next wave in Europe is going to be revolving credit products in countries that are not English-speaking," Mr. Robertson said. Credit card banks "are looking to get into those countries early, using American-style marketing prowess."
