Bank sells its stake in company

19 percent share in Partners First sold to other partner

Credit cards

May 29, 1999|By Bill Atkinson | Bill Atkinson,SUN STAFF

Nearly two years after a Linthicum-based financial consulting firm and two heavyweight regional banks teamed to start a credit-card company, one of the partners has sold out.

BankBoston Corp. said yesterday that it sold its equity share in Partners First, a Baltimore-based credit-card company, for a pretax gain of about $50 million in cash.

The large regional banking company, which has $75.7 billion in assets, was a minority partner in the joint venture between Linthicum-based First Annapolis Consulting Inc. and Bank of Montreal.

BankBoston sold its stake in Partners First to a Bank of Montreal subsidiary, the company said. "At this point in time, it makes sense to take this opportunity to divest our ownership," Peter Manning, executive vice president at BankBoston, said in a statement.

A BankBoston spokeswoman said, "It was always envisioned that we were going to phase this out. It was the idea of not just cashing out, but setting up something of value."

Officials at Partners First could not be reached for comment.

Privately held First Annapolis and the banks announced in September 1997 that they would create a credit-card company to challenge larger issuers, such as Wilmington-based MBNA Corp., that dominate the credit-card industry at the expense of regional banks.

A Partners First executive said several months after the company was formed that the goal was to have $10 billion in credit-card loans on its books by the company's third anniversary.

The companies said the alliance would enable them to compete regionally and nationally with less expenditure.

When the deal was announced, Bank of Montreal said it was kicking in $115 million in cash to capitalize the new company for a 69 percent ownership stake in Partners First.

Its subsidiary, Chicago-based Harris Bank, contributed its consumer credit-card portfolio, which had 500,000 customers and $750 million in loans.

BankBoston exchanged its national credit-card portfolio of 550,000 customers and about $1.2 billion in loans for cash. In return, it received a 19 percent ownership stake in the company.

First Annapolis contributed a credit-card portfolio management company for a 12 percent share of the company.

Pub Date: 5/29/99

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