06.15.09

AmEx credit card charge-offs dip in May

Posted in hot news, news, online, top, world of money tagged , , , , at 8:35 pm by carydalton

SAN FRANCISCO (MarketWatch) - Credit card charge-offs at American Express dipped slightly in May as the company benefited from selling some previously written-off customer loans, according to a regulatory filing Monday.

“Credit metrics appear to be trending in-line with management’s guidance and ahead of our expectations,” Sanjay Sakhrani, an equity analyst at Keefe, Bruyette & Woods, wrote in a note to investors after the disclosure.

Capital One Financial saw credit card charge-offs rise last month, while Discover Financial Services disclosed an increase in charge-offs within one of its closely watched master trusts.

Credit card companies have been hit hard this year as surging unemployment makes it harder for some customers to pay off debt racked up on their cards. However, unemployment has been increasing at a slower pace in recent weeks.

Charge-off rates disclosed by AmEx , Capital One and Discover all came in better than KBW’s Sakhrani expected in May.

AmEx said its net write-off rate was 10% on a managed basis in May. That was down from 10.1% in April. This data includes credit card loans that may have been securitized and loans that have been held on the company’s balance sheet.

AmEx said the write-off rate benefited from sales of some loans that had previously been written off. Proceeds from those transactions were treated as partial recoveries, the company explained.

AmEx shares climbed 19 cents to $25.35 during afternoon trading on Monday.

Capital One said the managed charge-off rate for its U.S. cards business was 9.41% in May, up from 8.56% in the previous month. The rate benefited from a change in the way Capital One processes bankrupt accounts. Without that change, the charge-off rate in May would have been roughly 9.91%, the company explained.

“We now have two months data for the company’s second quarter and it appears that the managed charge-off performance for all the three segments combined is trending better than our estimates,” Sakhrani wrote.

Capital One stock fell 2.6% to $23.33 during afternoon trading on Monday.

The net charge-off rate in one of Discover’s master trusts set up in 2005 was 8.91% in May, up from 8.26% during the previous month, Sakhrani noted.

“The net charge-off rate deteriorated in May, but was slightly better than our expectations and in line with management’s guidance,” the analyst said.

Discover shares climbed 2.3% to $9.52 during afternoon action on Monday.

AmEx credit card charge-offs dip in May

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Marsh on Monday: Battle looming over Trichets successor at ECB

Posted in business, economic, hot news, news, online tagged , , , , at 4:35 am by carydalton

The Germans may want one of theirs to succeed Trichet

Commentary: And why shouldn’t they?

LONDON (MarketWatch) — When it comes to pushing through senior government officials to the forefront of international organizations, France rules the roost. In the post-war period, this is one area where the French have taken on world class status compared with the Germans. But over the designation of the successor to France’s Jean-Claude Trichet as president of the Frankfurt-based European Central Bank, the game could be about to change. It’s still a little early even for preliminary skirmishes, let alone for a showdown. Trichet will remain in office until November 2011 and still has much to do, not least in helping to steer the 16 nations of Economic and Monetary Union (EMU) through to recovery and implementing an exit from the low interest rates and plentiful liquidity that the ECB has engineered during the downturn.

The well-respected governor of the Banca d’Italia in Rome, former Italian Treasury official Mario Draghi, is still favored to take over from ex-Banque de France governor Trichet. This reflects a European political understanding that - because during the 1990s the Germans managed to achieve Frankfurt as the ECB’s headquarters - the Federal Republic has no hold on the presidency.

However, that unwritten compromise may turn out not to be permanent. Chancellor Angela Merkel is starting to display an increasingly uncompromising line on the ECB. In a speech two weeks ago, she showed she is no mood to be pushed around, when she referred to the bank as coming under “international pressure” to relax its anti-inflationary stance. If Merkel wins the general election in September, as is generally expected, she could use her strengthened position to champion the cause of a Bundesbank man at the head of the ECB - a move that would be bound to put Germany on a collision course with France. The subject is highly controversial - but a little reflection shows the Germans hold some strong cards. In the 63 years since the founding of the International Monetary Fund, a Frenchman has occupied the post of IMF managing director in Washington for 34 years, while a German has been in the job for only four years.

In the 51 years of the existence of the European Commission in Brussels, France has held the top position for 14 years, Germany nine years (and that was a long time ago: the Commission’s first president Walter Hallstein, from 1958 to 1967). At the London-based European Bank for Reconstruction and Development, a Frenchman has been president for 15 of the bank’s total life of 18 years. Since the founding of the Organization for Economic Cooperation and Development in Paris, the home country, France, has occupied the post of secretary general for 24 years out of 61 years - and the Germans have never had their own man at the helm.

Of course, these European posts are supposed to be decided on the basis of competence rather than nationality. But the Germans can make a good case for having some plausible heavyweight candidates.

President Nicolas Sarkozy, it can safely be assumed, would be strongly opposed to the Germans holding Frankfurt and having their own man at the helm, a position that would be the monetary equivalent to having their cake and eating it. We have been here before, when France and Germany engaged in a bitter struggle in 1998 over the nomination of Wim Duisenberg, then the president of the Dutch national bank, as the first ECB chief.

It is starting to look as though a new tussle might be brewing that would make even that epic battle look tame in comparison. Nothing much will be said about this in public for a few months. But - assuming that Angla Merkel’s power is reinforced - look out for the first indications of a “German for president” stance to emerge shortly after the September elections.

Marsh on Monday: Battle looming over Trichet’s successor at ECB

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