Discover Takes Charge for UK Card Unit, Begins Stock Repurchase
Difficult days in the United Kingdom credit card market cause Discover to take a charge in its third quarter as it implements a $1 billion stock buy back program.
Card issuer Discover Financial Services (NYSE: DFS) announced today it expects to take a non-cash impairment charge valued at about $422 million on its Goldfish credit card business in the United Kingdom in its quarter ending Nov. 30. The charge is equal to the value of the goodwill and other intangible assets of the Goldfish division as of August 31, Discover reported.
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David Nelms, Discover CEO, said in a statement that the charge was due to “disruption in the UK financial markets, higher interest rates and our decision to reduce our loan exposure to the UK market.”
Nelms said the UK card market remains challenging but Discover’s efforts to refocus the business have begun to produce results.
Discover also announced today that it will conduct a share repurchase program for up to $1 billion of its common stock. The buy back program expires in November, 2010. Discover went public in June at $28 a share. Midday today it was trading at $16.97, down 2.3 percent for the day.
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