Sovereign Will Draw On Santander’s Global Experience In Credit Card Relaunch

Sovereign Bank will draw in part on marketing strategies that have succeeded abroad for parent company Banco Santander S.A. when it relaunches its branded credit card portfolio next year under its own roof, Eduardo Tobon, Santander's U.S. cards division  head, tells PaymentsSource.

Wilmington, Del.-based Sovereign on Aug. 30 said it has completed the acquisition of its $200 million Sovereign-branded credit card portfolio from Bank of America Corp., bringing it in-house for the first time after a long-term agent relationship (see story).

Santander, based in Madrid, Spain, with broad banking operations in Europe and Latin America, has robust credit card programs in dozens of countries around the world that may provide some inspiration for its U.S. credit card marketing efforts, Tobon suggests. Santander completed its acquisition of Sovereign, with $77 billion in assets, in January 2009.

“The timing was right to bring the portfolio in-house, so we can better integrate credit cards into our offerings,” Tobon says. “In general we have seen better results at our banks when we have a credit card relationship with a customer versus where that’s not the case. There’s a better connection and a stickiness, and (cardholders’ bank) balances tend to be higher and attrition is lower.”

As part of the sale agreement, BofA will continue to service the 105,000 accounts in Sovereign’s portfolio until sometime in 2012, Tobon says.

Specific product features will not change “in the short term,” he notes. Sovereign currently offers a broad array of credit cards for consumers and small businesses, including no-annual-fee rewards cards.

But Tobon says Sovereign is strategizing now about how it will market its branded cards through its 723 branches in the Northeast, and through other channels, next year when account-servicing shifts from BofA to Sovereign.

For one thing, Sovereign plans to focus less on consumers’ household income and more on their payment preferences and habits, Tobon says.

 “Our approach is to look not just at income, but to analyze the attitudes consumers have toward credit cards, and we intend to approach marketing from that perspective, which has worked in other markets around the world,” he says.

Currently Sovereign offers credit cards carrying either the Visa Inc. and MasterCard Worldwide brands. But Tobon declined to comment on whether the bank will continue to support both brands when the transition from BofA is complete.

“The plan calls for listening to our customers, and changing and expanding products as needed; we want to address a variety of needs through the bank and credit cards are an important piece of that,” Tobon says.

Birmingham, Ala.-based Regions Financial Corp. in June also announced plans to take over management of its credit card portfolio (see story).

Bank of America Corp. earlier this month announced it is shedding certain international and affinity credit card portfolios in order to focus on its core credit card products (see story).

What do you think about this? Send us your feedback. Click Here.