Bank of America Shifts Credit Card Unit, Leadership

Bank of AmericaBank of America, the nation’s top lender and second-largest credit card issuer, is combining its troubled Global Card Services with its deposits business under Susan Faulkner, who’s been with the bank for 25 years, BofA said today.
Faulkner will now head the combined business of “Global Card Services and Deposits” following the resignation of Ric Struthers, who was a principal founder of MBNA and has marshaled Bank of America through the hardship of mounting credit losses.
In a statement, BofA praised Struthers for “leadership and vision managing the largest credit card portfolio in the world.”
“He and his team navigated our unsecured lending business through the most significant consumer credit crisis in 50 years,” said Joe Price, president, Bank of America Consumer, Small Business & Card Banking. “In just one year, Ric rapidly repositioned the card business, significantly reducing our exposure to credit losses and simplifying our credit card suite by introducing, easy-to-understand, basic products.”
Faulkner, 47, whose new title will be Deposits and Card Product Executive, will have dual offices in Charlotte, Bank of America’s base, and in Wilmington, Del., where the card business will still be headquartered.  She will report to Price.
The credit card unit reported a $5.6 billion loss in 2009. The loss includes a provision for credit losses exceeding $30 billion in 2009, compared with $20.1 billion in 2008.
BofA reported a $5.2 billion loss for the fourth quarter 2009, including its repayment to the government bailout program, compared to a loss of $2.4 billion a year earlier. Card income for the fourth quarter declined $1.3 billion, mainly due to higher credit losses on securitized credit card loans and lower fee income.
Net charge-offs were $1.2 billion lower than the previous quarter, the first quarter-to-quarter decline in nearly four years, the bank reported.
That prompted Chief Executive Brian T. Moynihan to forecast that credit losses may have peaked.
“As we look at 2010, we are encouraged by signs the economy is improving, as we have seen in the stabilization of our credit costs, particularly in the consumer businesses,” Moynihan said.
But he also conceded the economic conditions remain fragile.
The bank’s provision for credit losses in the fourth quarter was $10.1 billion, $1.6 billion lower than the third quarter and $1.6 billion higher than the same period a year earlier.
“We continue to change the way we offer and price products, emphasizing clarity, choice and control in response to changing customer needs,” Price said in today’s announcements.  “Integrating the development of our card and deposit products will help create greater value for customers, especially as the way they choose to make payments continues to evolve.”