Fidelity drops credit card partners American Express, Bank of America
By Tim McLaughlin
BOSTON (Reuters) - Fidelity Investments said on Monday it is dropping long-time credit card partners American Express Co and Bank of America Corp, ending a 12-year partnership that has generated billions of dollars in fees.
Boston-based Fidelity, which has 24 million customers, said its new partners will be U.S. Bancorp and Visa Inc, effective Monday. The exclusive alliance will provide Visa branded credit-card products to U.S. consumers, including Fidelity customers.
The switch is another setback for American Express, already reeling from its lost deal with warehouse club retailer Costco Wholesale Corp. AmEx said earlier this year the loss of the Costco contract would hurt profit for two years. AmEx shares are off 25 percent over the past year and were down 2.9 percent Monday morning. Many other major U.S. financial stocks were also lower, with shares of Bank of America, Visa Inc and U.S. Bancorp all down by more than 2 percent.
Ram Subramaniam, president of Fidelity's retail brokerage business, did not give any specific reason for ending the partnership with American Express and Bank of America.
"It's been a long, good partnership," he said.
A spokeswoman for American Express said the Fidelity portfolio accounts for less than 1 percent of billings.
A Bank of America spokeswoman said the agreement not to continue the relationship with American Express was a mutual decision between the two companies.
"Over the past several years, Bank of America has been exiting from our financial institutions card business where Bank of America has limited opportunity to deepen customer relationships, and this move is consistent with that strategy," she wrote via email. Continued...