Credit card portfolio sales, which dwindled sharply last year as the economy retracted, will remain stagnant for at least another year, one analyst says.
Issuers sold 14 card portfolios in 2009, less than half the 35 deals the previous year and the lowest total since 1993, according to Robert Hammer, CEO of credit card investment and advisory firm R.K. Hammer & Associates.
Credit card-portfolio assets sold last year totaled $8.8 billion, an 84% decline compared with $55.3 billion in 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 firm says.
The economic downturn, combined with record-setting credit card charge-off rates and a tougher regulatory environment, hurt card-portfolio sales, along with a lack of buyers with cash, Hammer says. “There was simply less available capital out there chasing these (merger and acquisition-based) card-portfolio deals,” he says.
Because of “all these negative forces,” Hammer expects card-portfolio sales to remain anemic until early next year.
Credit card portfolio sales hit their most recent peak in 2006, when 83 portfolios were sold representing $90.3 billion in total assets. The gross premiums earned that year were 19.8%.
Hammer’s data do not include card-portfolio sales involving small credit unions.
