BMW Is Holding Sale Talks for Its Branded Credit-Card Unit

(Bloomberg) -- BMW AG may be getting out of the credit-card business.

The world’s second-biggest luxury carmaker has held talks with banks as it considers a sale of its credit-card portfolio, according to people familiar with the matter who asked not to be identified because the discussions were private. A spokesman for BMW declined to comment.

BMW is seeking to take advantage of aggressive bidding among banks for co-brand card deals in recent years. Lenders see the cards as a lucrative way to profit from a customer’s loyalty to a certain brand or store.

Munich-based BMW is one of the last major consumer companies to still own and manage its card portfolio. It would join retailers including Cabela’s Inc. and Signet Jewelers Ltd. in off-loading the management of their card portfolios to big banks, which already maintain the necessary compliance and customer service systems for such programs.

While BMW’s portfolio is relatively small, it’s appealing because it caters to the affluent drivers of the company’s vehicles. BMW’s Salt Lake City-based banking subsidiary -- BMW Bank of North America -- had about $289 million in credit-card loans and about $1.1 billion in unused commitments as of Sept. 30, according to filings with the Federal Deposit Insurance Corp.

That compares with the $10 billion portfolio of Walmart Inc.’s private-label and co-brand credit cards that is set to change hands next year after the retailer selected Capital One Financial Corp. to be its new issuer, ending its 20-year partnership with Synchrony Financial.

BMW has four Visa Inc.-branded products, including a no-fee card that offered 3 points per dollar spent at BMW centers and one point per dollar spent on everything else. The firm’s BMW Signature card and its invitation-only Ultimate card offer richer rewards.

BMW’s card portfolio generated $35.9 million in interest and fee income for its banking subsidiary in 2017, according to data from the FDIC. The cards generated roughly $10.9 million from swipe fees.

©2018 Bloomberg L.P.