27 October 2010
- Bank of America’s 3Q Earnings (19 Oct)
- Financial Times
- Merchant Payments Coalition Response to BAC Charge
- Visa Downgrade (Bloomberg)
The biggest story of the week has largely gone unreported. Bank of America (BAC) has taken a $10.3B goodwill impairment charge in 3Q.
The Merchant Payments Coalition responded to the impairment charge (reference above)
“With a Federal Reserve decision on debit interchange rates not expected until mid-2011, today’s claims by Bank of America dramatically overstate reality and represent a feeble attempt to divert attention from its mortgage foreclosure problems,” said Doug Kantor, counsel to the Merchants Payments Coalition.
In the 8-K, Bank of America said it plans to take (ref The Street)
”a number of actions that would mitigate some of the impact when the laws and regulations become effective,” but it didn’t provide details about what those actions might be.
Will write more later, but I can assure you BAC is looking for debit alternatives. Given their size, most anticipate a new product driven from both their retail and global card team (including merchant services). So in addition to AT&T/Discover, we will now have another major bank led team developing a new payment product with a multi billion dollar incentive.
What does this mean for MA and Visa? Not good news for US growth.