WALL STREET – Just as credit unions were about to be offered to sell their stock in MasterCard and Visa back to the credit card companies, this week’s and last week’s stock market crash has cut the value of their MasterCard and Visa shares by almost 15%, costing credit unions millions of dollars in potential earnings.
The stock market crash has come as the two credit card companies are preparing a redemption of their shares, which they are using to finance billion-dollar legal settlements. The share redemptions were expected to take place next month, but are expected to be delayed, given market conditions.
The shares have been lucrative for credit unions and banks who were awarded them as part of initial public offerings by the respective companies. More than 1,000 credit unions hold stock in one of the companies, with a handful of credit unions owning stock on both. Thousands more hold stock through a third-party processor, such as PSCU Financial Services or Cards Systems for CUs, which paid out MasterCard and Visa dividends to their members earlier this year.
MasterCard shares, for example, went public at $49 in May 2006 before rising as high as $320.30 last May. The shares traded as high as $230.36 on Sept. 5, the Friday before the government takeover of Fannie Mae and Freddie Mac, but were trading around $196 yesterday, a fall of 15%. The shares rebounded on a later market rally to close at $208.53.
Visa shares, which went public at $59.50 in March and rose as high as $89.50 in May. The shares have fallen almost 14% over the past two weeks and closed at $66.90 yesterday.
