Visa, the world’s largest electronic payments company, exceeded Wall Street’s expectations by reporting a 40 per cent surge in quarterly profit as more consumers turned to credit cards and other forms of electronic transaction, the FT reports. Global payments volume increased by 13 per cent in the three months ending in March, and remained at that pace during Visa’s fiscal third quarter. Optimism for the world’s continued migration toward electronic payments has helped the San Francisco-based company offset concerns that new US regulations limiting transaction fees would sap revenue. Forbes says the company said it would take measures such as changing its fee structure in response to changing debt card regulations in the US.
The Federal Reserve has approved setting the cap on debit card interchange fees at 21 cents per transaction, above the 12 cents proposed by the central bank last year, the FT reports. Shares in Mastercard and Visa rose 11 and 15 per cent respectively on the announcement, Bloomberg says. The Fed decision effectively offers banks a reprieve from the wider effects of interchange reform, which will see revenue from swipe fees collapse, the Washington Post says. Banks will also be allowed to claw back one cent per transaction conditional on anti-fraud measures.
The US Federal Reserve set a higher than expected cap on debit card transaction fees, lifting the shares of electronic payments companies Visa and MasterCard. The Fed’s board voted 4-1 on Wednesday to set so-called interchange fees at 21 cents per transaction, above the 12 cents limit the regulator had proposed in December, the FT reports. The final rules, which were mandated by last year’s landmark Dodd-Frank financial services reform legislation, were considered a victory for banks and card payments companies that had lobbied unsuccessfully to delay the Fed’s implementation. Visa shares rose 15 per cent on the news, while Mastercard rose 11 per cent.
The Department of Justice has alleged anti-competitive practices in a suit filed against American Express even as it reached a settlement with Visa and Mastercard over similar issues, the FT reports. Shares in American Express plunged to a four-month low after the company said it would defend itself against the allegations. The DoJ says that swipe fees charged on merchants by card companies breach antitrust rules. Amex contends that the settlement reached with its two larger rivals hands them even more market power, but consumer groups have largely acclaimed the DoJ’s approach, the WSJ adds.
Visa has told banks they must stop using the payment system of Chinese state-backed China UnionPay to process international transactions for co-branded Visa and UnionPay credit cards, as required by operating regulations, the FT reported. If banks did not comply with Visa’s request, the card company said it would start to charge penalties from August 1. China UnionPay replied: “Neither side has the right to unilaterally restrict cardholders’ options for overseas payment channels.”
After a low-key year, China Investment Corporation really has come back out swinging. After last week’s news of its nifty deal with Apax Partners in Europe, a (US) SEC filing by the Chinese sovereign wealth fund gives an intriguing glimpse into how it is using exchange-traded funds to take positions on sectors ranging from healthcare to consumer services and gold.
The filing, as the FT reports on Tuesday, showed that CIC’s largest US stock market investments were in miner Teck Resources, investment bank Morgan Stanley, asset manager BlackRock and Visa, the credit card company. And about a quarter of CIC’s entire US portfolio was in ETFs, many of them provided by BlackRock’s iShares division. Read more
China Investment Corporation, the Chinese sovereign wealth fund, is using exchange-traded funds to take positions on sectors ranging from healthcare to gold, according to a filing with the US SEC. The filing showed that CIC’s top US stock market investments were in miner Teck Resources, investment bank Morgan Stanley, asset manager BlackRock and credit card company Visa. About a quarter of its US portfolio was in ETFs, many of them provided by BlackRock’s iShares division.
Plastic in the form of credit cards, that is.
The Business Standard reported on Tuesday that in India, “the annual growth in credit card balances has fallen to an all-time low”: Read more
Just in time for Christmas – the credit card crunch.
So is the Oppenheimer analyst right? Read more
The latest on Tuesday,
- HBOS takes £1bn Q1 writedown in trading book, £1.8bn writedown in banking book. £4bn rights issue confirmed, 2 shares offered for every 5 existing shares at 275 pence a 45% discount to current market price. Dividend to be paid in shares – statement
- Deutsche reports first loss in five years – statement
- Unexpected death of Alliance & Leicester chairman, Sir Derek Higgs, deputy chairman Roy Brown to temporarily take over – statement Read more
“Visa’s record $17.9bn initial public offering is the exception rather than the rule in a barren US IPO market this year” says Anuj Gangahar in Thursday’s FT.
Just 24 deals have been priced so far in the US this year, the lowest level for the first quarter since 2003. The 23 deals other than Visa’s raised a combined $4.5bn. In the same period last year, 67 deals came to market, raising a combined $12bn. Read more
Shares in Visa, the world’s largest credit card network, soared on their Wednesday stock market debut, gaining 36% and adding more than $15bn to the company’s market value. Visa started trading at $59.50 in New York following its record $17.9bn IPO, the largest in the US. The shares ended the session at $56.50, up 28.4%. Shares had been priced at $44, above the expected range. Its market cap of $56.8bn at Wednesday’s share price ranks Visa as one of the world’s biggest financial services houses.
Visa, the world’s largest credit card network, on Tuesday night pulled off the richest IPO in US history, raising $17.9bn and providing a windfall for some key banks including JPMorgan, Bank of America and Citi. Visa decided to proceed with the offering despite nervousness in equity markets. Tuesday’s pricing came after the Fed’s rate cut and as financial shares rallied strongly. The company’s shares priced at $44 per share, above the pre-IPO range of $37-$42. They will begin trading under the ticker “V” in New York today. If Visa decides to float its share overallotment – an additional 40.6m shares – the IPO would raise as much as $19.65bn, almost double the $10.6bn US listing record set by AT&T Wireless in 2000.
We’ve already mentioned the Disciplined Investor’s take on the “Milli Vanilli government” that facilitated JPMorgan’s deal with Bear Stearns. But it is worth revisiting for its point about Visa Inc’s $17bn mega-IPO (lead underwriters none other than JPMorgan and Goldman Sachs) set for Wednesday – a day after the Fed’s policy meeting and just as some of Wall Street’s big banks kick off the first-quarter reporting season.
Visa will “assuredly end up postponing its IPO”, ventures DI. Unless the lead underwriters- JPMorgan and Goldman Sachs – are “completely deranged and masochistic, Tuesday is not going to be the best day to attempt to bring history’s largest IPO to market”. Read more
Planned IPOs worth more than $21bn have been pulled from the global market in the first two months of the year, nearly double the amount raised through successful flotations in the period, according to data to be issued by Thomson Financial on Thursday. The value of cancelled or postponed deals, the highest on record for the first two months of any year, underlines the degree to which the credit market turmoil is hurting investor appetite in the equity capital markets. The biggest among 34 planned IPOs raising $1bn-plus this year, mostly from emerging market issuers, is from US-based Visa Inc which hopes to raise up to $18.8bn.
Visa Inc, the world’s largest credit card network, said Monday it hoped to raise up to $18.8bn in its long-awaited flotation, which will give some of the top US banks, which hold stakes in Visa, a badly needed financial boost. Visa has decided to proceed with what will be America’s largest ever IPO, despite current nervousness in equity markets. US bank shareholders including Citi, Bank of America and JPMorgan stand to gain $1bn to $4bn from the process after cashing in about half their stakes. At first sight, says Lex, the timing of the float “looks challenging”. But, it concludes, the move will ultimately benefit Visa as well as the banks.
The credit card issuer is proposing a possible $18.8bn public offering, with a maximum sale price of $42 a share. You can view the prospectus, filed with the SEC, here. Read more