American Express Launches Credit Card War

Kenneth Chenault, the chief executive officer of American Express Co, has been a winner for much of his life. He was junior class president. He went on to graduate magna cum laude from Bowdoin College in Brunswick, Maine, and earned his degree at Harvard Law School.

Since taking over at Amex in 2001, Chenault, 54, has led the New York-based company to 14 straight quarterly earnings increases of more than 10%. Warren Buffett, whose Berkshire Hathaway Inc is Amex’s biggest shareholder, with a 12.2% stake, praises Chenault’s stewardship. “I need all the help I can get ? and Ken has certainly provided it.”

Chenault will be hard-pressed to keep his winning streak alive. On June 30, Bank of America Corp agreed to pay US$35 bil for MBNA Corp, the largest independent credit-card issuer. The acquisition threatens a relationship in which Amex and MBNA issue co-branded credit cards that helped boost Amex’s second-quarter profit by 16% to a record US$1.01 bil.

“I’ve been in the company since 1981 and involved in the card business since 1984, and I believe we are in the strongest position we’ve been in,” Chenault says. “I remain confident in our overall network strategy and our relationship with MBNA going forward.”

Chenault has to contend with attempts by Visa and MasterCard to go after his high-spending customers as well. Amex cardholders on average spent about US$9,460 per card last year ? four times more than Visa and MasterCard’s customers, Amex says.

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