Household HSBC Watch

BY SHERYL JEAN, Pioneer Press

A handful of top executives at Metris Cos. received pink slips Thursday as the credit card issuer became part of finance giant HSBC Group, and more are expected in the coming months. Chief Executive David Wesselink, credited with turning around a company once on the brink of bankruptcy, is gone. So is Chief Financial Officer Bill Houlihan.

And up to 100 employees at the company’s Minnetonka headquarters will be phased out in the next nine months, Wesselink said. Metris, which issues credit cards to consumers with spotty credit histories, employed 2,200 people, including about 400 in Minnetonka and 150 in Duluth. HSBC Finance Corp., the Prospect Heights, Ill.-based consumer finance unit of Britain’s HSBC Group, on Thursday completed its $1.6 billion purchase of Metris. Metris stockholders received $15 per common share — a penny above Metris’ closing price on Wednesday.

HSBC Finance spokesman Stephen Cohen wouldn’t comment on the prospects for Metris employees or its offices in Arizona, Florida, Minnesota and Oklahoma. HSBC still is in the review process, he said. HSBC Finance, with 31,500 employees, is the nation’s fifth-largest issuer of MasterCard and Visa credit cards.

Metris’ name eventually will change to HSBC Credit Card Services, Wesselink said. Matt Melius, Metris’ head of operations, will run the new unit in Minnesota. Wesselink’s departure was not unexpected. He came out of retirement to join Metris as CEO in 2002 after the former CEO Ron Zebeck was fired.

“The layoffs are not as bad is it could have been,” Wesselink said. “In cases like this, we could have seen more than half our people blown away.” In addition to Wesselink, Thursday was the last day in the office for Houlihan, Chief Information Officer Dan Piteleski, Treasurer Scott Feldman and investor relations manager Jeff Grosklags. General Counsel Richard Evans will leave at the end of the month.

Wesselink will reap a cash severance payment of nearly $3.6 million, Evans $1.6 million, Houlihan $1.4 million and Piteleski $1.3 million, according to documents filed with the Securities and Exchange Commission. Metris had shrunk significantly from when it was a high flier five years ago. The company faced a series of financial, legal and regulatory issues that caused its stock to plummet to less than $2 in 2002 from $42.94 in 2000.

Metris has about $5.8 billion in loans and 2.2 million accounts, compared with $12 billion and 3.8 million accounts at its peak in 2001. HSBC has indicated that it would like to grow the business beyond that, Wesselink said.

Author Sheryl Jean can be reached at sjean@pioneerpress.com or 651-228-5576.