Synchrony Says Walmart to Drop Lawsuit Against Credit-Card Issuer -- Update

By AnnaMaria Andriotis 

Synchrony Financial said Wednesday Walmart Inc. has agreed to dismiss a lawsuit against the bank that alleged it breached the terms of their long-running credit-card deal.

In the lawsuit, filed late last year in the U.S. District Court of the Western District of Arkansas, Walmart said that some of Synchrony's underwriting standards financially harmed the retailer. Walmart was seeking damages estimated to be no less than $800 million.

A Walmart spokesman confirmed that the retailer is dropping the lawsuit.

Also on Wednesday, Synchrony reported higher profit, which exceeded analysts' expectations.

Shares of Synchrony gained 11% in morning trading.

Synchrony had been Walmart's exclusive credit-card issuer until the merchant decided last year to replace it with Capital One Financial Corp.

Walmart filed the lawsuit last year as Synchrony was negotiating the possible sale of its existing Walmart credit-card balances to Capital One.

Capital One Chief Executive Richard Fairbank said Tuesday the bank had agreed to buy the roughly $9 billion in card balances. On a call with analysts to discuss the bank's fourth-quarter earnings, he said the balances have "high credit losses," adding that Capital One's share of credit losses on the acquired portfolio is fixed at a low percentage throughout the partnership with Walmart.

Loan losses as of last spring were around 9% of outstanding balances on Walmart credit cards, The Wall Street Journal previously reported.

Synchrony Wednesday said it renewed and extended retail card partnerships with Walmart unit Sam's Club and Amazon.com Inc. Investors had been concerned about the future of the Sam's Club partnership following Synchrony's loss of the Walmart deal.

Write to AnnaMaria Andriotis at [e-mail]

(END) Dow Jones Newswires

January 23, 2019 10:13 ET (15:13 GMT)

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