Visa International's proposed restrictions on its member banks' participation in other payment systems created fallout on two continents Thursday.
A high-ranking European Union official strongly criticized Visa for seeking to prevent its European members from issuing American Express cards or other nonbank brands.
And in New York, where the Visa proposal had apparently caused a rift within Citicorp, the head of its Diners Club subsidiary was removed from his job.
Coming less than a week before the joint annual meeting of Visa's international and regional boards, the escalating controversy and its reverberations put the bank card group on the defensive.
Spokesmen for both American Express Co. and Dean Witter Discover & Co. said they were not only heartened by the European official's statement but saw a greater likelihood of overturning an existing Visa U.S.A. bylaw that prohibits domestic banks from issuing the competing brands.
Speaking at a press briefing in Brussels, the European Commission's senior official on competition policy, Karel Van Miert, called Visa's proposal "a problem" and said the commission "cannot accept it."
His remarks were a shot across Visa's bow in advance of the association's gathering next week in Montreal.
Visa issued a statement that it would give the commissioner's position "due consideration."
American Express and Dean Witter filed complaints against Visa with the European Commission earlier this year.
About two weeks ago Diners Club International made a similar filing, which raised eyebrows because its parent, Citicorp, is Visa's largest member and holds a seat on Visa's board.
In recent days, as word spread of the Diners Club action, the unit's chairman and chief executive officer, Robert H. Rosseau, was called on the carpet. Sources familiar with the situation said officials at the parent company were in an uproar over the filing against Visa.
Citicorp said Thursday that Mr. Rosseau, after five and a half years at Diners' helm, will be reassigned to another, unspecified job within the holding company.
Mr. Rosseau was succeeded by William H. Friesell, a 23-year veteran of Citicorp and a former Diners Club European business manager, who most recently held senior positions in private banking at Citibank.
Citicorp retained Diners' president Peter Rogers and chief financial officer Martin Goldin but removed them from the unit's three-member board. They were replaced as directors by Jean-Paul Votron, head of marketing for Citibank's retail banking in Europe and North America, and Thomas Sisson, who is in charge of the branch business in Chicago, where Diners is based.
Citicorp spokeswoman Maria Mendler said the new appointments, though sudden, are considered permanent.
Though neither Citicorp nor Diners Club would elaborate on underlying causes, there was little doubt Mr. Rosseau was a casualty of the Visa controversy. Sources speculated there was a lapse in communication between Citicorp and its subsidiary.
"What may have been the right move for the company may not have been the best move for Rosseau's career," said James L. Accomando, a Fairfield, Conn.-based consultant.
While it may have been in the interest of Diners Club franchises abroad - many of them owned by banks that were critical of Visa - to try to block the proposed bylaw, Diners Club's actions presumably caused embarrassment at Citicorp and Citibank.
The franchises reported to Mr. Rosseau, who in turn reported to Rana Talwar, head of retail banking for Europe and North America. Roberta Arena, Citibank's U.S. credit card chief and a Visa U.S.A. director, is in a different part of the organization.
Citicorp said it and Diners Club management are reviewing the legal complaint. Some observers said Citicorp may withdraw the filing, which, as of Thursday, Visa still had not seen.
