Executives of Barclays PLC, whose purchase of the credit card issuer Juniper Financial Corp. is set to close within a month, told American Banker that the deal would allow it to compete with U.S. giants like Capital One Financial Corp. and MBNA Corp.
In separate interviews last week, two top Barclays officials emphasized different goals for the Juniper pickup. Matthew Barrett, the chairman of the British banking company, cast it as a chance to glean strategies for the United Kingdom and elsewhere.
Garry Hoffman, the chief executive of Barclays' card unit, spoke more aggressively. "Our ambition is to build a business outside the U.K. that is as important to Barclays as their business inside the U.K.," Mr. Hoffman said Friday.
Barclays announced in August that it was buying Juniper, which is based in Wilmington, Del., as is MBNA. Both Mr. Hoffman and Mr. Barrett said the aim was to pick up talent - namely veteran credit card executives Richard W. Vague and James Stewart 3d.
"What we bought in Juniper is two people who have operated cards companies on a much bigger scale than Juniper," Mr. Hoffman said.
Mr. Vague and Mr. Stewart ran the Dallas credit card company First USA before selling it to Bank One Corp. in 1997, then ran Bank One's card business for two years before starting Juniper.
According to Mr. Hoffman, Barclays may acquire other U.S. card companies.
"If we were just going to simply stop at Juniper, then we wouldn't have made the acquisition," he said. "We will look at other acquisitions if they are value-creating for our shareholders and if we feel they will accelerate our strategy in the U.S."
Mr. Barrett spoke more cautiously about the prospect of follow-up deals, however. "We'll see how successful it is," he said. "There is no urgency to build on it right now." He even said of Juniper, "In the total scheme of things it's not that big of a transaction."
Barclays is paying $293 million for the 98% stake in Juniper owned by CIBC. It is also buying the 2% owned by Juniper's top managers.
The deal is awaiting regulatory approval and is expected to close by the beginning of December, Mr. Hoffman said.
Gwenn Bezard, a senior analyst for Celent Communications in New York, said new entrants can gain share in the U.S. card business.
"Theoretically the market has been saturated for a while, but in practice growth has been strong," Mr. Bezard said. "Credit card issuers are spoiled children in the U.S., used to making a lot of money. It's not because you have single-digit growth that you are doomed.
"If you look at market share in the U.K., you have essentially three issuers. … It's not unreasonable for U.K. issuers to consider the U.S. market as a little more promising, since it is not nearly as consolidated," Mr. Bezard said.
Barclays initially plans to issue cards here cobranded with the Barclays and Juniper names, but next year it would test only Barclays-branded cards through direct mail.
Juniper would nearly double the size of Barclays' international card portfolio. Barclays expects a $150 million operating profit in three to four years after taking $70 million to $100 million in losses in 2005 and 2006, Mr. Hoffman said.
Barclays has 1.8 million cards outstanding in continental Europe and Asia, 10.8 million in the UK.
"The U.S. is a more mature, more saturated market, with penetration well over 70%," Mr. Hoffman said. "In the U.K. it is more around 48%. The number of cards a U.S. consumer would have in their wallet would be six to seven; in the U.K. it would be two."
Mr. Barrett agreed, saying, "There's enormous natural growth potential in Europe.
"In the U.S. the battle lies in competing on the value and service you give people who have several alternatives in their wallets," he said. "If we get really good at the cards market in the U.S., we can import what we learn to Europe and Asia."
Competition from large issuers like Capital One and MBNA does not faze Barclays, Mr. Barrett said.
"There is no skill set that we don't have … in this market. We can hold our own in any aspect of the business."
Juniper would help Barclays learn the strategy of cobranding and private-labeling that Mr. Vague and Mr. Stewart pursued.
"The reason we think we can grow in the U.S. is that there remains substantial growth potential in the partnership market," Mr. Hoffman said.
