Settlement to be Funded by Visa USA Financial Institutions, Not Visa Inc.
Settlement Addresses Claims Against Bank Defendants
SAN FRANCISCO, Nov. 7 /CNW/ -- Visa Inc. announced today that the
litigation with American Express pending since 2004 has been settled. The
settlement will ultimately be funded by members of Visa USA -- not Visa Inc.
-- through the company's retrospective responsibility plan, a series of
agreements with U.S. financial institutions to fund financial obligations of
certain litigation, including this case. The plan was described in Visa
Inc.'s recent S-4 filing.
The settlement agreement, which is contingent upon Visa USA member
approval, ends all current litigation between American Express and Visa USA,
Visa International and their members related to this issue. By settling this
litigation Visa is not conceding any liability in the dispute. In addition,
the settlement resolves American Express's actual or potential claims against
the named bank defendants in this case: US Bank, Wells Fargo, Washington
Mutual, JPMorgan Chase & Co. and Capital One. The agreement covering the bank
defendants absolves them of all responsibility in this matter related to their
participation in the Visa and MasterCard networks.
"Visa is doing what is in the best interests of its membership and the
new organization," said Visa Inc. CEO and Chairman Joseph W. Saunders. "Our
retrospective responsibility plan and these settlement agreements reduce risk
and uncertainty for our members and Visa. I believe this is a positive
resolution for Visa and its financial institutions."
Under the proposed agreement, American Express will receive $945 million
from Visa and an additional payment from the bank defendants by March 15 and
no later than March 31, 2008. Beginning March 31, 2008, Visa will pay
American Express an additional amount of up to $70 million a quarter for 16
quarters, for a maximum total of $1.12 billion. Visa's nominal payout is
$2.065 billion with an accounting reserve of $1.9 billion and a net present
value to Visa of $1.8 billion.
The member institutions of Visa USA - and not Visa Inc. - bear the
responsibility for funding the settlement through the application of Visa's
retrospective responsibility plan. The plan includes a multi-step mechanism to
fund financial obligations of Visa USA and Visa International related to
certain litigation, including the American Express case. Through this
mechanism, any payments made by Visa Inc. as part of this settlement
ultimately will be reimbursed by Visa USA member institutions.
"With this dispute behind us, Visa will remain focused on being a global
payments leader," Saunders said. "We are confident in our competitive position
and the value we provide our customers with our comprehensive suite of
products, secure and reliable payment system, and leading global brand and
ABOUT VISA: Visa operates the world's largest retail electronic payments
network providing processing services and payment product platforms. This
includes consumer credit, debit, prepaid and commercial payments, which are
offered under the Visa, Visa Electron, Interlink and PLUS brands. Visa enjoys
unsurpassed acceptance around the world and Visa/PLUS is one of the world's
largest global ATM networks, offering cash access in local currency in more
than 170 countries. For more information, visit www.visa.com.
FORWARD-LOOKING STATEMENTS: This press release contains forward-looking
statements. These statements may be identified by the use of words such as
"will," "believes," "anticipates," "intends," "estimates," "expects,"
"projects," "plans" or similar expressions. Such forward-looking statements
include, without limitation, statements about the proposed settlement, our
retrospective responsibility plan, strategy, future operations, prospects,
plans and objectives of management and events or developments that we expect
or anticipate will occur. The forward-looking statements reflect Visa's
current views and assumptions and are subject to risks and uncertainties,
which may cause actual and future results and trends to differ materially from
the forward-looking statements, including but not limited to Visa's ability to
achieve its strategic objectives and the expected goals of the settlement and
our retrospective responsibility plan; general market conditions; the outcome
of legal proceedings; uncertainties inherent in operating internationally; and
the impact of law and regulations. Many of these factors are beyond Visa's
ability to control or predict. Given these factors, you should not place undue
reliance on the forward-looking statements.
CONTACTS: Joseph Carberry
For further information:
For further information: Joseph Carberry, Visa, +1-415-932-2164,
email@example.com Web Site: http://www.visa.com