Jason Moser: From @BTCapital12 asks,
“Can you guys comment on the lawsuit filed by Walmart against Synchrony? Do you think it’s really just part of
a bargaining strategy for the receivables? Or is there more to this? Also, do you then
think Capital One is getting the short end of the stick as they
won the Walmart deal?” Folks, remember, you can always
reach out to us via Twitter. These are some great questions here.
What do you have there for BTCapital here, Matt? Matt Frankel: It’s kind of
a he-said, she-said at this point. Walmart is claiming that Synchrony didn’t
use great underwriting standards when approving people for their co-branded card, and it resulted
in higher than expected losses, and therefore lower income for Walmart
than they were promised with the deal. They’re suing for $800 million
to recoup whatever they feel they lost. Synchrony’s claim is that this is a baseless
lawsuit, they used the same underwriting standards that they use for all of their store credit
card products, and that Walmart is just trying to get out of paying market value for that
loan portfolio, which they agreed to do if they broke the deal.
The outcome of this remains to be seen. I tend to think that Synchrony
will be the winner. I don’t think Walmart’s going
to get $800 million dollars out of them. They may end up settling at some point. Synchrony’s
business goes beyond the Walmart partnership. I think at their growth rate, they’ll make
up the lost revenue, and they’re not terribly worried about the Walmart revenue. They just want to put it behind them at this point,
and the lawsuit is preventing them from doing that. Moser: Sounds good. I appreciate that,
Matt, and I’m sure our listeners do, too.