JPMorgan weighs sale of $1 billion AARP credit card portfolio

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JPMorgan Chase & Co. is considering selling the credit card portfolio it built through an almost three-decade partnership with the AARP, the nonprofit representing 38 million people, according to people with knowledge of the matter.

The sale would include roughly $1 billion in credit card receivables, the people said, asking not to be identified because the discussions are private. Alliance Data Systems Corp. is among those interested in the portfolio, one of the people said.

Representatives from JPMorgan, Alliance Data and the AARP declined to comment.

JPMorgan’s AARP rewards card offers users 3% cash back on dining and gas purchases and 1% back on all other sales. The nonprofit group, formerly known as the American Association of Retired Persons, is known for its clout in American politics, focusing on issues affecting people over age 50.

Alliance Data is looking to build up its private-label credit card and payments businesses after agreeing to sell its Epsilon data unit to Publicis Groupe SA this year for $4.4 billion. In June, the company named Melisa Miller, who previously led the card services business, to be president and chief executive.

Alliance Data’s stock has slumped by about 50% since the start of last year on concern that its fate is closely tied to mall retailers now struggling as consumers shop more online.

The company, which has historically issued credit cards through its Comenity Bank subsidiary, has said it hopes to increase its stockpile of credit card receivables to more than $20 billion, from $17.6 billion at midyear. It acquired several portfolios in June that added more than $900 million, executives told analysts on a conference call last month.

“We are seeking healthy verticals and brands,” Miller said at the time, noting the company has been using partnerships with Ulta Beauty Inc., Sephora and Wayfair Inc. to increase its presence in the beauty, home goods and e-commerce categories. “We have deliberately expanded our universe and verticals where our tools, technology and techniques will also add value.”

Still, for JPMorgan, the AARP credit card is a relatively small portfolio. The bank is the nation’s largest credit card issuer, boasting $158 billion in outstanding card loans at the end of the second quarter. It recently offered more rewards on a card with InterContinental Hotels Group and introduced a new card for business owners with Southwest Airlines Co.

Bloomberg News