MBNA Heads to Spain

U.S. card issuers continue to develop new markets overseas. In the latest announcement, MBNA Corp. indicated that the Bank of Spain has approved its application to market credit cards and related products in Spain. Operations should begin there in the third quarter of this year. In addition to being the second largest credit card issuer in the U.S., MBNA has over 7.5 million customers overseas in the United Kingdom, Ireland and Canada, and $11 billion of managed loans in those countries. Spain would be the company's first non-English speaking market.

Brian Dalphon, Senior Executive Vice President at MBNA told the American Banker, "Spain is similar to the United Kingdom back in 1993, and that is perfect for us." Credit bureau information on Spanish consumers is primarily negative—delinquencies, chargeoffs, etc. Dalphon noted, "we are used to talking to people and gathering our information." Spanish consumers carry unsecured debt but not much of it is on credit cards. The data reveal about $8 billion of credit card debt outstanding in Spain and $30 billion of other unsecured consumer loans. Consequently, the Bank of Spain expects the credit card market to grow 33 percent a year through 2005.

Interestingly, MBNA plans to use its affinity group marketing strategy in Spain. MBNA is the leader in affinity marketing in the U.S., having issued cards for over 4,500 organizations. If they apply the U.S. model to Spain their targets will include universities, sports teams and professional organizations. However, Dalphon said the company does not view Spain as a springboard into other Spanish-speaking markets in Latin America. The economics for an affinity card marketer are much less favorable in those countries.