Discover Financial Services
expects to take a $422 million charge related to a U.K. credit card business in the fourth quarter and plans to buy back up to $1 billion in stock.
Discover blamed "continued disruption in the U.K. credit markets," higher interest rates and a desire to reduce loan exposure there for the charge it expects on its Goldfish MasterCard and Visa credit card business.
"While the U.K. credit card market remains very challenging, our efforts to refocus this business have begun to produce positive results," CEO David Nelms said in a statement. "We will continue implementation of significant actions to improve the performance of our U.K. business, and will continuously monitor our progress and assess options to maximize shareholder returns."
The company also said its board had approved a share repurchase program of as much as $1 billion. The program expires on Nov. 30, 2010.
Discover, spun off by
last summer, expects to report fourth-quarter results Dec. 20. Analysts polled by Thomson Financial expect earnings of 35 cents a share on revenue of $990.7 million.
Discover shares were losing 0.9% to $17.22 in recent trading.