Discover Card Going Solo!
As reported by MSN Money, Morgan Stanley has decided to spin off it’s credit card business.
The world’s second-largest investment house is shedding its credit card business.
While reporting strong fourth-quarter profits today, Morgan Stanley also announced that it is spinning off Discover card operations.
The Wall Street powerhouse has been under pressure from shareholders to unload Discover, which is one of the largest credit card issuers in the world but until recently struggled to show strong growth.
Morgan Stanley had planned to dump the Discover unit earlier, but Chairman and CEO John Mack canceled the move a year ago, arguing the unit was valuable for its earnings stability.
Today, though, he appeared to have changed his tune. “The spin-off will unlock considerable value for the shareholders of Morgan Stanley,” Mack said in a statement. He also said the securities and credit card businesses can show stronger growth if separated.
Only time will tell whether this move will benefit both parties. I find it hard to believe Morgan Stanley no longer wants Discover. We just have to wait and watch.