Bank of Hawaii gets OK for credit card sale
By Frank Cho
Advertiser Staff Writer
Regulators have granted approval for Bank of Hawaii to sell its credit card portfolio to American Express Co., allowing the card company to issue its cards directly to U.S. bank customers for the first time.
The deal is expected to close Saturday, executives said yesterday.
American Express Co. is already raising the ante in Hawai'i's credit card war with initiatives to kick-start the new Bank of Hawaii card with consumers.
American Express, which agreed in December to buy Bankoh's $226 million card portfolio, said yesterday it will waive interest payments for six months on new purchases and balance transfers to the new card.
It also said it will donate $200,000 to the Hawai'i Nature Center to finance educational programs.
"We looked to the Bank of Hawaii because the portfolio looked very attractive from a customer standpoint," Gilbert Ahye, American Express' senior vice president for card business development, said yesterday morning.
Relatively few Bank of Hawaii customers fail to pay their credit card bills, and they typically carry high balances, Ahye said.
The company and the bank did not disclose the acquisition price or how much they are spending on advertising and marketing.
The purchase of Bank of Hawaii's credit card portfolio by American Express is a relatively small deal. But the stakes are large — essentially, how the credit card company can grab a share of the nation's lucrative bank-card business.
And American Express has clearly put Hawai'i on the front line of the credit card war being waged between it and Visa and MasterCard.
American Express is playing a key role in an antitrust lawsuit brought by the U.S. Justice Department against Visa for barring banks from issuing cards other than Visa.
Bank of Hawaii had offered Visa credit cards until it agreed to sell its portfolio to American Express.
Banks and other issuers of Visa and MasterCard products are hoping to take advantage of the switch and have been aggressively wooing Bankoh's card customers with print, radio and TV advertising.
But Lori McCarney, executive vice president for marketing and productions at Bank of Hawaii, said yesterday they have had little effect.
She said nearly all of the bank's roughly 148,000 business and consumer clients will receive the new card by Saturday.
U.S. banks have traditionally been off limits for American Express because of agreements with Visa and MasterCard that prohibit banks who issue their cards from also offering American Express.
American Express is the sixth-largest card issuer, with a portfolio value of more than $25 billion.
Frank Cho can be reached by phone at 525-8088, or e-mail at fcho@honoluluadvertiser.com
