Credit card portfolio sales, which dwindled sharply last year as the economy contracted, will remain stagnant for at least another year, according to R.K. Hammer.
Issuers sold 14 card portfolios in 2009, down from 35 sales the previous year, and the lowest total since 1993, according to Robert Hammer, the credit card investment and advisory firm's chief executive.
Credit card portfolio assets sold last year totaled $8.8 billion, down 84% from 2008, and the lowest total since 1996. The average gross premiums earned last year on card portfolio deals was 13.3%, down from 16.5% in 2008, the company said.
The economic downturn, record-setting credit card chargeoff rates, a tougher regulatory environment and a dearth of buyers all combined to drive down portfolio sales, Hammer said. "There was simply less available capital out there chasing these card portfolio deals."
Because of "all these negative forces," he expects card portfolio sales to remain anemic through early 2011.
Credit card portfolio sales hit their most recent peak in 2006, when 83 portfolios with $90.3 billion in total assets were sold. The gross premiums earned that year were 19.8%.
Hammer's data does not include card portfolio sales involving small credit unions.