Battle for credit cards

Natural conflicts of interest arise in the shareholder structure of the Card Complete Group. The majority owner with 50.1 percent is UniCredit Bank Austria, 25 percent is held by Raiffeisen Bank International (RBI) and 24.9 percent is held by the AVZ Foundation of the City of Vienna, a relic of the former Zentralsparkasse. The two banks may well have different business interests than the foundation.

Negative pressure

The business model of Card Complete, formally a bank, has been under pressure for a good ten years. Since then, no major investments have been made. This has led to an investment backlog, especially in the IT sector. However, it is said that none of the owners are willing to invest a larger sum in the company.

On the contrary.

The world of payment transactions has developed rapidly. As a full-service provider, Card Complete operates two business areas. Acquiring is the infrastructure of terminals and the processing of payment flows. Merchants and service providers are connected to the card network.

Issuing is the issuing of cards to customers. Most consumers apply for and receive a credit card from their main bank, but the issuer is often a credit card bank such as Card Complete. One third of the approximately one million card customers come from UniCredit Bank Austria and Raiffeisen.

There have long been international, specialized large providers for the infrastructure, and most banks now issue cards themselves.

In addition, card customers have been traveling less outside the EU since Corona, which is why the lucrative exchange rate income is disappearing. And while the banks are benefiting from rising interest rates, Card Complete has to refinance customers’ advance financing through the banks at great expense. For 2023, Card Complete Service Bank AG reported a balance sheet loss of 14.4 million euros.

A number of potential buyers have been explored for five years. Nothing has worked out, most recently not even with the Italian IT group SIA. The company’s value has been estimated at just 250 to 300 million euros.

The most likely option now is filleting. Bank Austria and RBI want to buy out the card customers, it is rumored. The rest, i.e. the terminals and infrastructure, are to be sold. This part brings in higher revenues than issuing the credit cards.

To date, however, only one serious potential buyer has emerged: the British DNA Payments Group, a fintech group in London specializing in payment transactions.

Backers

The people behind the company are interesting. The founder and owner is the Kazakh businessman and banker Arif Babayev and his partner Nurlan Zhagiparov.

However, the offer is likely to be modest, with only 70 to 80 million euros being rumored.

The acquisition of a bank in the EU is subject to the ownership control procedure. The financial market supervisory authority submits the application and the European Central Bank makes the final decision.

Babayev is believed to have dual citizenship, and officially identifies as British. He gained banking experience at ABN Amro, the Royal Bank of Scotland and as manager of one of Kazakhstan’s largest banks, which was previously owned by Russia. His partner Zhagiparov also worked there.

In 2017, Babayev took over Sky Bank in Kyiv, which has since been put on hold.

In accordance with its foundation’s mandate, the AVZ would prefer to keep the company. However, the two co-owners hope that the AVZ will agree to their model. The banks would have to pay a fee to Card Complete for the card business, the amount of which has not yet been determined. They have the advantage of having sufficient liquidity themselves to finance the card sales in advance. Bank Austria and RBI do not want to comment on the issue at present. The deal is expected to go through in the autumn.