NEW YORK - In its first deal to issue cards specifically to the customers of a U.S. bank, American Express Co. said it will purchase the $226 million credit card portfolio of Bank of Hawaii, a subsidiary of Pacific Century Financial Corp.
The portfolio includes 148,000 business and consumer accounts.
Though the deal is small, it is significant for American Express, which has not been able to make such agreements with banks because of policies instituted by Visa U.S.A. and MasterCard International. Those policies are now the subject of a federal antitrust lawsuit, in which a decision is pending.
"This is the first agreement we have reached with a bank to acquire a card portfolio and to market to their bank customers," said Alfred Kelly Jr., group president of the U.S. consumer and small-business services at American Express. "We hope to establish similar deals with other U.S. banks in the future."
Under terms of the deal, American Express will set up a card marketing program with Bank of Hawaii in which the company will issue and market bank-branded American Express cards to the bank's customer base.
"As part of our growth strategy we are moving aggressively to acquire high-quality credit card portfolios from banks," said Kenneth Chenault, president and chief operating officer of American Express.
The cards will be marketed through Bank of Hawaii in Hawaii and the West Pacific, through Pacific Century Bank in California, and through more than 500 automated teller machines and direct mail. Bank of Hawaii will continue to issue its own debit cards.
The companies expect the deal to be completed in the first or second quarter.