Hoping to fend off nonbank incursions among its small-business customers in Louisiana, Hibernia Corp. is pushing an all-purpose credit card to entrepreneurs.
The Visa card, which has a credit line of up to $50,000, is being marketed as a source of working capital as well as an expense card, said Robert M. Kottler, senior vice president of small-business banking at New Orleans-based Hibernia.
Small companies with less than $1 million in annual revenues comprise the target market for the card, Mr. Kottler said. Such merchants, which represent 91% of the 126,000 small businesses in Louisiana, could use the high-limit card for virtually all their ordinary financial needs, he said.
"We think this is a product that small businesses are looking for," Mr. Kottler said. "Why go out and get separate term loans and lines of credit?"
The card is Hibernia's response to market-share raids by aggressive nonbanks and Wells Fargo & Co., San Francisco, which is mailing prequalified line-of-credit offers to small businesses across the country.
"We want to get to our customer base before it gets too many Advanta and Wells Fargo offers," Mr. Kottler said. "I think the nonbanks are going to continue to be more aggressive in going after our small-business customers."
Other nonbanks Mr. Kottler said he has an eye on are American Express, First USA, AT&T Capital Corp., and General Electric Capital Corp.
Allan C. Bloomquist, senior vice president of the data base management firm Oxxfordcq Information Technology, applauded Hibernia's move.
"Customers have an all-in-one product that is easy to understand and easy to use," Mr. Bloomquist said.
The product is also economical from the bank's perspective, because customers won't have to continually apply for credit; instead, they can draw down on the card, Mr. Bloomquist said.
"It has processing efficiency," he said.
Last month the bank launched a direct-mail blitz promoting the card to current and prospective customers in Louisiana, Mr. Kottler said. About 100,000 mailings have been sent out.
"Get up to $50,000 credit quickly, easily, and with no financials," trumpets one of the mailings.
The variable-rate card features a streamlined one-page application, overdraft protection, and check access.
If the card does well enough, Hibernia might market it outside Louisiana, Mr. Kottler said.
"It's hard to tell," he said. "I want to go to our core market before our competitors do."
Hibernia, which has $7.5 billion in assets, has been one of the more innovative big banks to court small businesses. For example, the bank has been selling loans through direct mail since 1993.
The effort has borne fruit. A presentation by Hibernia chief executive Stephen A. Hansel this year showed the bank's small-business segment racked up a 31% return on equity and accounted for 12% of the bank's net income in 1995. He said the segment had a potential ROE of 49%.