Goldfish writedown fuels credit worry by Finance News Bulletin

Published: 03/01/08

Discover Financial Services, the US credit card collection, on Monday fuelled concern about the consumer praise outlook in the UK by announcing it would write down the value of its Goldfish credit card commerce by up to $422m (£204m)The writedown, which covers all the kindness on its $17bn acquisition of Goldfish from Lloyds TSB last year, reflected “continued disturbance in UK financial markets”, said David Nelms, Discover chief decision-makingMr Nelms supposed the disruption, higher interest rates and Discover’s decision to reduce its loan exposure to the UK market had abridged the book worth of the Goldfish business

The UK credit certificate market remained “very challenging” and Discover would “assess options to maximise saver returns”Discover paid a 22 per cent premium to Goldfish’s net receivables when it concluded the contract in February 2006 Like many of its rivals, Discover’s UK commerce has been strike by higher funding costs and rising loan losses Its international card commerce recorded more than doubled pre-tax wounded of $67m in the three months to August

Mr Nelms said Discover’s efforts to refocus the Goldfish commerce had begun to bear crop and it would continue implementation of “significant actions” to get better its performanceDiscover’s shares have fallen 40 per cent since the corporation was spun off from Morgan Stanley five months ago On Monday they were down more than 3 per cent at $1680 in early afternoon trading in New York

The company on Monday supposed the board had given authorisation for buy-backs of up to $1bn of storeMr Nelms said it was satisfied with its continued focus on risk management, pointing to the information that charge-offs in the US are expected to remain below 4 per cent in the fourth quarter The charge-off rate in its global business was 656 per cent in the third quarter

Goldfish, which had 800,000 customers, was at first a joint venture between Lloyds TSB and Centrica, proprietor of British GasDiscover, which had 15m customers in the UK, was seen as having paid a full cost for the business, which increased its credit card loan book to £23bn

Copyright The Financial Times Limited 2007Interbank rates fuel anxiety - Dec-03View of the day: European stocks - Dec-03Lex: UK rates - Dec-03Credit press piles on the pain - Dec-03Year end drives lending spike - Dec-03Paulson ‘confident’ of mortgage contract - Dec-03More from this sectorBlogsBrussels BlogCharles PretzlikClive CrookDear LucyEconomists’ ForumEnergy FilterJohn GapperGideon RachmanTech BlogThe in secret EconomistWestminster BlogWillem Buiter’s MavereconRegional pagesLatin American agendaChinaIndiaBrusselsInteractivePodcastsDebates & pollsAsk the expertMarkets Q&A© Copyright The Financial Times Ltd 2007 "FT" and "monetary Times" are trademarks of

Visit original article: