The structural changes under way at Wall Street firms could intensify competition for the most affluent cardholders, a stronghold for American Express Co.

As chargeoffs mount across the card industry, issuers have increased their reliance on affluent customers to generate profits. But even these low-risk, high-spending consumers have reduced their discretionary spending in the downturn, leaving less business for issuers to chase. And now the increasingly crowded field of premium products with lavish rewards is facing the potential addition of three heavyweights.

Merrill Lynch & Co. Inc. and Morgan Stanley offer specialty "deferred debit" cards for their wealth management clients. These cards, which are linked to brokerage accounts, function much like Amex's charge cards — at the end of each month the cardholder's purchases are debited from the account.

Goldman Sachs Group Inc. offers a regular debit card, without a deferment feature, as part of its banking services for private wealth management clients. It also recently introduced a platinum Amex charge card for its customers and employees.

Such niche cards, which have sizable reward programs, are not available to anyone other than the firms' current customers or employees. But with Bank of America Corp. set to buy Merrill this month, and Morgan Stanley and Goldman Sachs having converted to bank holding companies and seeking retail deposit customers, observers are predicting an expansion of their high-end cards, either by putting out new products or by offering the current ones to more people.

"It's likely that that space will become more competitive," said Boaz Salik, the managing principal at the consulting firm FischerJordan LLC, which has done work for Merrill, B of A, and Amex. "As these entities merge and become broader in their reach, it does give them a larger customer base to offer these products to."

Ram Subramaniam, the managing director and head of banking, lending, and accounts for Morgan Stanley's global wealth management group, said in an interview Friday that the deferred debit card is "very important for us" as part of the firm's "full suite of banking services and lending services" for existing clients.

The card is "one piece, an important piece, a growing piece" of Morgan Stanley's "broader banking services," he said.

Last month Morgan Stanley created a retail banking group and hired Cecelia "Cece" Sutton, a Wachovia Corp. executive, to lead those operations starting next month.

As Morgan Stanley evaluates its retail banking expansion, "we can imagine growing these activities, growing our retail banking, that includes existing clients and new clients," Mr. Subramaniam said. "We have in the pipeline some new products and services."

He said it was too soon to discuss the specific products under consideration, but he did say Morgan Stanley is evaluating cards along with other retail banking operations.

"Right now we do not offer a credit card, but I would say that's something being evaluated."

Amex in particular may face increased competition for its most valuable clients as the investment banks explore retail banking.

"Generally, the direction is probably going to become more competitive for Amex," Mr. Salik said. If companies like Merrill, Morgan Stanley, and Goldman expanded their card offerings, they would have "access to a much larger potential set of customers, and the ones that already have existing banking relationships." Such relationships "have some depth."

Amex would not comment for this story.

Merrill's deferred debit cards, which it issues directly, run on the Visa Inc. network. Morgan Stanley's (which JPMorgan Chase & Co. issues on the brokerage firm's behalf) run on the MasterCard Inc. network.

Goldman would not provide any details on its debit card, which is available only to its private wealth management clients, or the charge card that Amex offers to Goldman clients and employees. (Goldman has said it is considering setting up an Internet bank — a departure for a firm that has long focused on corporations and wealthy individuals.)

Some observers said similar marketing relationships could create opportunity, rather than competition, for Amex.

Partnerships make more sense for the investment banking firms than direct issuance, said Craig Maurer, an analyst at Credit Agricole Group's Calyon Securities. The firms could "partner up with an Amex to provide a high-profile card, partner up with a brand to match the high-profile name of their bank."

Even deferred debit products may have little practical appeal for a broader swath of consumers, Mr. Maurer said. "Are they going to be able to get high-net-worth clients to use their investment portfolios as everyday spending vehicles? Personally, I would think they would want separation of church and state" between brokerage and banking accounts.

But some analysts see an opportunity for Goldman to cut out Amex and issue cards directly to its well-heeled clients and employees.

"They've got such a great customer base — high-net-worth people, big spenders, low risk — in this marketplace, that's what issuers kill for," said Philip J. Philliou, a partner at the payment consulting firm Philliou Selwanes Partners LLC and a former Amex and MasterCard executive. "And who wouldn't want Goldman's name on a piece of plastic?"

Brian Riley, a research director in the bank card practice at TowerGroup, a Needham, Mass., independent research firm owned by MasterCard, said an expansion of the premium cards would be "a natural play" for companies that offer cards only to their wealthy clients.

"It's a way to attract new assets for issuing banks. It also gives the ability for free-standing companies who specialize in that to get into the card market, like a Goldman Sachs," he said.

"They're getting a bank license for other reasons, but since they're getting a bank license, they can get into cards."

This year Amex has reported a drop in discretionary spending by its core affluent customers, who are normally considered less vulnerable to economic downturns. The company's problems with credit quality have mounted as a result of its rapid growth in 2006 and 2007 and its exposure to the small-business sector and deteriorating housing markets.

Kenneth Chenault, Amex's chairman and chief executive, said at a conference in Washington this month that the impact of the current downturn "on spending has been very strong … across a range of income levels and high income levels."

It is "very different from the last two downturns, that you saw that level of impact."

Mr. Subramaniam said that in the current environment "people are more conscious of being able to manage their money," so deferred debit products may become more attractive than mainstream cards to affluent consumers.

With a deferred debit card linked to a wealth management account, spending is easier to track, he said. "You can see it, your financial adviser can see it, you manage your money much better."

A spokeswoman for Merrill said it was "too early to tell" what its future card strategy would be. B of A said the same thing.

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