Charge!
Jan 7th 2010 | NEW YORK
From The Economist print edition
From The Economist print edition
A card company returns to its roots
THE title of best performer in the Dow Jones Industrial Average in 2009 is a dubious accolade. American Express, whose shares notched up a gain of 118% last year, did so well in part because its stock had slumped in late 2008. For an iconic brand with affluent customers, volatility on this scale does not do nicely.Continue Reading at "The Economist"
The financial crisis uncovered two weaknesses. First, when securitisation markets collapsed, the company lost its primary source of funding. By converting into a bank-holding company in November 2008, Amex was not just able to get money (since repaid) from the Troubled Asset Relief Programme; it could also accept more deposits. Its haul of $24 billion-worth of certificates of deposit still represents a limited portion of overall funding. And it remains to be seen whether these depositors will remain loyal in times of trouble. But Amex says it will keep a more diversified funding model.
