Citizen Bank Case

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The merger of U.S. Citizen Bank and Louisiana Purchase Bank (LPB) in 1998 resulted in a formation of a financial powerhouse possessing core competencies in commercial lending and innovation. Upon recognizing the much needed annuity-driven market potential existing within the U.S. college population, the LPB pioneered the student credit card program in 1989. Indeed, the student credit card program proved to be more profitable with net income margin around 6 percent compared to that of 4 percent for non-student product offerings. In fact, LPB was collecting revenue on 60 percent of its accounts. The sheer magnitude of credit usage among college students caught public’s attention. Well respected college professors claimed direct correlation between credit institutions’ success and college students’ irresponsible financial behavior leading to debt and higher drop-out rates. Due to this increased public awareness, The U.S. General Accounting Office (GAO) initiated an investigative report to further analyze the magnitude of student credit card usage and its consequences on students’ academic, financial, and personal well-being. The GAO asked LPB’s head of Student Card Services division, Michelle Jeffries, to participate in a survey soliciting data pertinent to their college student accounts as well as information regarding LPB’s marketing approach to this demographic. Data submitted would be compared to that of other (unnamed) financial institutions and published (in aggregate) without identifying individual responders. In addition, Michelle Jeffries was notified that a popular investigative television series, ’60 Minutes’ will be featuring a story on student credit cards and plans to portray credit card issuers in a negative light similar to that of tobacco companies. I believe Michelle is in the best position to be the key decision maker due to the fact that she has the most insight into divisional operations, objectives, and values. She is the leader of the student...
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