HSBC, Polaris Modify Relationship
August 16, 2005
Filed under Uncategorized
Polaris Industries Inc. and HSBC Bank Nevada, National Association, formerly known as Household Bank, N.A. (HSBC) have entered into a new multi-year contract.
The new agreement, which took effect August 1, 2005, provides for income to be paid to Polaris based on a percentage of the volume of retail credit business generated; removes all credit and funding risk to Polaris immediately; and also eliminates the need for Polaris to maintain a retail credit cash deposit with HSBC, which was $49.8 million at June 30, 2005. The previous agreement provided for equal sharing of all income and losses with respect to the retail credit portfolio.
In a more obvious change for the estimated 1,500 Polaris dealers in the U.S., HSBC will begin to manage the Polaris private label credit card program under the StarCard label.
“This new structure will allow Polaris to substantially reduce the risk associated with our retail credit program while maintaining the current income potential of the business,” said Mike Malone, Vice President-Finance, Chief Financial Officer and Secretary of Polaris. “In addition, Polaris is no longer required to maintain the retail credit cash deposit on our balance sheet, and those funds will be available to pay down existing borrowings on our bank line of credit arrangement.”