Discover Sells U.K. Goldfish Card Unit
It cost about $1.7 billion to get in, but Discover is exiting the U.K. market after continuing losses from its Goldfish card.
Discover Financial Services announced this morning it would sell its troubled Goldfish card unit in the United Kingdom to Barclays Bank for about $70 million in cash and exit the U.K. market. Discover also will record after-tax charges on the transaction of between $190 million and $210 million in the first quarter.
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The Goldfish credit card has receivables of $4 billion and 1.7 million card accounts, Discover reported. Goldfish carries the MasterCard and Visa brands in the U.K., not the Discover brand.
Discover CEO David Nelms said in a statement that the sale will free up capital and allow the firm to focus on its U.S. card and payments processing businesses.
The Goldfish product has proven a mess since then-Discover parent Morgan Stanley purchased it in 2005 for about $1.7 billion from Lloyds TSB. Morgan spun off Discover last year.
Morgan combined its own Morgan Stanley card with Goldfish to bulk up the number of consumers carrying the card. But the faltering U.K. economy dragged the card down. In its fiscal 2007 fourth quarter Discover took a $391 million non-cash impairment charge for losses on Goldfish.
The Goldfish sale is expected to close by the end of Discover’s fiscal second quarter.
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