American Express Company (AXP) yesterday announced leadership and organizational changes to position itself for growth during a time of change in the payments industry, and to take advantage of the recovery in the world economy.
Most importantly, the company said that President Alfred F. Kelly Jr. will step down early next year, as he wants to run a company as a chief executive — a position that is unlikely anytime soon at American Express. However, Kelly will continue to lead the card issuer’s transition to a bank holding company until his departure.
As part of its organizational restructuring, the company is now grouping its global consumer, small business and network businesses and appointing Vice Chairman Edward P. Gilligan to head the group.
According to the new arrangement, Anre Williams, President of Global Commercial Card, and Charles Petruccelli, President of Global Business Travel and Foreign Exchange, will not report to Gilligan anymore but will retain their current responsibilities.
Also, Stephen J. Squeri has been promoted to Group President at its new Global Services organization, which will include customer-service, technologies, business processing and information management.
As part of the government’s $700 billion Troubled Asset Relief Program (TARP) to provide liquidity to the credit markets, AmEx received $3.39 billion worth of government funds. The company repaid the entire amount earlier this year.
The management shuffling comes at a time when the charge card issuer is emerging from its consumer credit problems. Until 2007, AmEx was aggressively issuing credit cards to consumers outside of its affluent charge-card customer base. That over-expansion caused earnings to declines last year, resulting thousands of retrenchments.
Though AmEx’s results for the last few quarters benefited from successful re-engineering efforts and from a diversified business model, American Express experienced continued weakness in card-member spending and high levels of loan losses. We anticipate continued benefits from the company’s diversification and cost-cutting efforts, but the ongoing global crisis and volatile U.S. dollar will continue to impact the results in the coming quarters.
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