THE Co-operative Bank is to buy Northern Rock's credit card business for an undisclosed sum.
The bank is in advanced negotiations for Northern Rock to transfer its credit card portfolio consisting of about 90,000 credit card accounts. As part of the proposed transaction, the Co-operative Bank will be able to offer new credit cards to Northern Rock customers.
Mervyn Pedelty, Chief Executive, Co-operative Financial Services, said: `We regard credit cards as a core business and this acquisition will fit well with our existing portfolio. Going forward, the Co-operative Bank will be able to offer credit cards to new and existing customers under the Northern Rock brand.`
Financial analysts Datamonitor say that, by outsourcing its credit card business, Northern Rock can expect to boost its pre-tax profits by £ 7.7 million.
Says Datamonitor: `The move exemplifies the ongoing trend of consolidation in the competitive UK market and suggests that the white labelling of card portfolios will be increasingly common in future.
`Although the acquistion will not have a major impact on the Co-operative Bank's standing in the UK cards market, the bank is digging its heels in to ensure that, in this environment of consolidation, it can fight its corner.`