Friday, October 15, 2010
MetaBank's troubles affect NetSpend
On Oct. 12, 2010, MetaBank made public news that the Office of Thrift Supervision, a federal bank regulation agency, issued a directive for MetaBank to discontinue its iAdvance loan program. The program is offered to consumers through NetSpend Holdings Inc's prepaid cards.
According to a Securities and Exchange Commission filing, NetSpend said the OTS determined that MetaBank engaged in "unfair or deceptive acts or practices in connection with its operation of the iAdvance program."
NetSpend, the second largest U.S. provider of general purpose reloadable prepaid cards, said that approximately 71 percent of its active prepaid debit cards were issued by MetaBank. Given MetaBank's current situation and possible future actions by the OCS on the issuing bank, NetSpend warned that it may be forced to move its cards to another issuer. Additionally, NetSpend said service disruptions caused by MetaBank's troubles would force the program manager to seek a new issuer. NetSpend, which expected to begin trading as a public company on Thursday, Oct. 14, refiled for its initial public offering (IPO), according to The Associated Press. Recent reports have estimated NetSpend could raise $253 million in its IPO. The AP story said NetSpend does not believe MetaBank's difficulties will affect its IPO.
Notice to readers: These are archived articles. Contact information, links and other details may be out of date. We regret any inconvenience.
