Target: Credit Card Operations Strong Enough To Satisfy JPMorgan Deal
The unit is "hundreds of basis points" above the level at which JPMorgan could begin exercising authority, Target spokeswoman Susan Kahn said.
Kahn declined to be more specific.
Delinquencies for Target's securitized credit-card portfolio are rising at historic rates, according to a regulatory filing by the retailer on Thursday.
Delinquencies in October for the $8.71 billion portfolio jumped to a rate of 8.1%, or by 230 basis points, to $709 million, on a year-over-year basis. This is the third month in a row that year-over-year delinquencies have risen at such a historically rapid pace, Credit Suisse said.
Target in May sold 47% of its stake in the credit-card unit to JPMorgan Chase for $3.5 billion. Under terms of the sale, the portfolio's performance must remain "sufficiently strong."
If "substantial unanticipated portfolio deterioration" occurs, JPMorgan Chase would gain the right to direct Target's credit-card team to put in place alternative underwriting and risk-management practices until sufficient improvement is seen.
In response to a query on Thursday, Target had said only that its 2008 outlook anticipates performance above the threshold at which JPMorgan Chase could become involved to that degree.
Shares of Target closed on Friday at $28.08, up 8 cents, or 0.3% and unchanged recently after hours. JPMorgan Chase dropped 66 cents, or 2.8%, to $22.72 and were also unchanged after hours.
-By Karen Talley, Dow Jones Newswires; 201-938-5106; karen.talley@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=%2FyQit1qi1GWz7Y2iwr8Vcw%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
November 21, 2008 16:54 ET (21:54 GMT)
Publié le 21 novembre 2008 Copyright © 2008 Dowjones
Partager sur:
