Fitch Launches First U.S. Credit Card Seller/Servicer Ratings

NEW YORK – Fitch Ratings announces that it has completed seven U.S. ABS Seller/Servicer ratings for the following U.S. credit card issuers:

• First National Bank of Omaha;
• InfiCorp Holdings, Inc.;
• HSBC Finance Corp. (Card Services and Retail Services);
• MBNA America Bank, N.A.;
• Metris Companies Inc.;
• Providian National Bank.

These companies service a total of $103 billion in receivables for 143 Fitch rated transactions. Fitch acknowledges the importance of seller/servicer operations in asset-backed securities performance and ultimately in its credit rating process. Accordingly, in December 2004, Fitch published its criteria for rating credit card originators and servicers and the ratings are being incorporated as a required component of Fitch’s ABS rating process. Press releases for each company listed above with their individual ratings and the ratings rational were also released today and can be found on the Fitch Ratings web site at ‘www.fitchratings.com’.

Fitch believes operational risk reviews are critical, particularly in light of recent merger and acquisition activity. ‘Fitch’s rating process for ABS seller/servicers in general and credit card seller/servicers in particular are the most comprehensive in the industry,’ says Kevin Duignan, Managing Director, ABS, Fitch Ratings. ‘Fitch’s rating approach is distinctive in that it is a formal, required component of Fitch’s credit analysis and it encompasses corporate performance, origination and servicing.’

Seller/servicers are rated according to the same 1 (highest) to 5 (lowest) scale already utilized by Fitch’s Operational Risk Group (ORG) for other areas of structured finance. Reviews for an additional five credit card companies are being scheduled to take place by year-end.

The evaluations are performed by a team of analysts from the Operational Risk Group, and the ABS group with input from Financial Institutions and, as needed, additional Fitch resources. ORG has long established programs for rating servicers in structured transactions that include RMBS and CMBS sellers and servicers and CDO asset managers. ‘Combining the expertise of product specialists, transaction analysts, and financial institution and corporate analysts with the experience of the Operation Risk Group creates a holistic approach to the rating that investors and market participants value,’ said Stephanie Petosa, Senior Director, ORG, Fitch Ratings.

Fitch was the first agency to publish a formal rating criteria methodology for U.S. ABS seller/servicers. Titled ‘Rating ABS Seller/Servicers: Credit Where Credit is Due’, the criteria establishes a more precise connection between the operational and financial quality of the seller/servicer and credit enhancement determination. Individual, product-specific reports that delineate those features of origination and servicing unique to individual asset types have been published for credit cards and student loans. The ‘Rating ABS Seller/Servicers’ criteria report and product-specific criteria reports are available on the Fitch Ratings web site at www.fitchratings.com.

Fitch’s rating definitions are available on the agency’s public web site, www.fitchratings.com. Published ratings, criteria and methodologies and relevant policies and procedures are also available from this site, at all times. This document will remain on the public site for seven days.