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Company will sell advisory unit to focus on credit cards

Wednesday, Feb. 2, 2005 | 9:01 a.m.

The American Express Co. announced Tuesday that it was spinning off its financial advisory business in an effort to focus on its card and travel services operations.

American Express Financial Advisors, while profitable, has been a drag on the faster-growing charge card and credit card operations and a payment network business that processes more than $400 billion in payments worldwide. Splitting off the advisory unit, executives said, will allow both companies to grow more quickly.

The spinoff is expected to be completed in the third quarter, and American Express will then be free to concentrate on its card business and the payment network.

Those businesses had revenue of $22 billion and profit of $2.7 billion in 2004. The revamped company is expected to generate earnings growth of 12 percent to 15 percent a year and have a return on equity of 28 percent to 30 percent, compared with 18 percent to 20 percent now.

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