Regions Bank pulls credit card servicing in-house, ending B of A deal

By , CardRatings contributor
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In a transaction involving more than a billion dollars in accounts, Alabama-based Regions Bank announced an agreement to purchase its private-label consumer credit card portfolio from FIA Card Services, a Bank of America subsidiary. According to Forbes.com, the deal involved half a million consumer credit card accounts marketed under the Regions Bank name.

Bank of America created FIA Card Services as a private label credit card servicer shortly after its merger with MBNA. Under the FIA banner, Bank of America provided both the funding and the customer service infrastructure to support "white label" consumer credit programs for smaller regional banks, as well as for brokerages and retailers.

In some cases, consumers may hold a Bank of America credit card and a privately branded credit card issued by FIA, unaware that both cards come from the same company.

For Regions Bank, the consolidation gives it greater control over customer service and lending decisions. Under a servicing agreement between Regions and FIA, customers will notice no change in the day-to-day servicing of their accounts. Regions Bank will assume full control of the customer service operations related to the over 500,000 accounts by the middle of 2012.

According to a Regions press release, John Owen, senior executive vice president and head of Consumer Services, expressed hope that getting back into the consumer credit card business would help the bank solidify relationships with customers, while strengthening its overall lending portfolio.

Regions Bank joins a growing trend among major banks to "insource" its credit card payment processing services. For instance, until J.P. Morgan Chase & Co.'s acquisitions of Bank One and Washington Mutual brought servicing in-house, Chase credit cards were processed by a third party company owned by Synovus.

Since then, Chase has used its platform to extend relationships from basic bank accounts through credit cards and home loans. Regions Bank may use its new credit card operation to make similar moves over the coming years.

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