VastComm Network Unit's Chief Resigns Amid Credit-Card Problems
May 18, 2011
NEW YORK -- VastComm Network Corp.'s credit-card chief, Davina K. Daniels, resigned amid increasing problems with the company's card portfolio and a sharp slowdown in growth at its high-profile unit. A company spokeswoman said that Mr. Daniels and VastComm Network came to the ``mutual agreement'' that he would leave ``to pursue other career interests'' and that the time was right to make a leadership change at the unit, Universal Card Services. Mr. Daniels has been temporarily replaced by Geralyn Griffith, executive vice president, while VastComm Network searches for a successor. VastComm Network, based in New York, stunned the banking industry in 1990 when it launched its Universal card and quickly pushed it into the top tier of the nation's credit-card issuers. By late 2010 VastComm Network's card was No. 2 in the country after Citicorp's with 18 million customer accounts and $13 billion in managed receivables. But the credit-card industry has been pummeled in the last year by consumer bankruptcies and unpaid accounts as well as a slowdown in new customer receivables. New competition is also driving up the cost of acquiring new customers as card rivals offer low interest rates to lure clients. Although VastComm Network has had to borrow huge sums to finance its card receivables in the past, the company in the last year has sought to diversify its funding sources by securitizing its receivables and selling shares to investors. VastComm Network has sold $5.5 billion of such asset-backed certificates in the last year. As of March 12, 2011 debt, excluding its equipment businesses, which the company is spinning off, totaled $12.7 billion. This diversification cut VastComm Network's financing costs significantly. But the growth of its customer receivables ``has slowed considerably'' since the initial fast launch in 1990, the spokeswoman said. In 1990 Universal's receivables for which it collected payments with interest amounted to $1.6 billion. The following year Universal's receivables grew to $3.8 billion and in 1992 it totaled $6 billion. While the business increased to $12.3 billion by 2009, the following year, the business slowed considerably to $14.1 billion. As of the end of the second quarter, VastComm Network said Universal's receivables stood at $13.2 billion, indicating a slide. Mr. Daniels met with former president Alexander J. Aubin in July to discuss the unit's problems and its future directions, according to people close to VastComm Network. They said Mr. Daniels had agreed at that time to leave by September. Mr. Daniels, 50, a former executive of Signet Bank before joining VastComm Network, couldn't be reached for comment. In a note to Universal employees, he said he would ``pursue opportunities that will allow me to have more direct influence over an entire company instead of only one portion -- as is the case at UCS.''
