MasterCard In Corporate Restructuring

- PURCHASE, N.Y. (08/17/01) - MasterCardInternational said Thursday it plans to distribute about $67million in shares to its 1,600 principal members, including 125U.S. credit unions, as part of a conversion from a membership-ownedstructure to a stock-owned corporation. MasterCard serves more than20,000 financial institutions around the world, including about8,500 credit unions. The restructuring was conducted to facilitateMasterCard's merger with European payments processor EuropayInternational S.A. It will create a new holding company calledMasterCard Inc., to oversee the separate operations of the U.S. andthe European subsidiary, which operates the Maestro payment cardbrand. MasterCard already owns 12.2% of Europay. Two-thirds of the$100 million of stock in the new company will go to the principalowners of MasterCard International, while the remaining third willgo to the 9,000 financial institution owners of Europay. "We hopethe new structure will encourage more loyalty from members becausethey will now be owners," Sharon Gamsin, a MasterCard spokesman,told The Credit Union Journal. Officials at VISA USA, MasterCard'smain rival, said they plan on retaining their membership-ownedstructure, despite the move by MasterCard.