CHICAGO -- Bank One Corp., the fourth-largest U.S. bank, on June 28 killed its Internet-only subsidiary WingspanBank.com after the unit failed to produce the kind of revenue momentum expected at its launch two years ago.
The Chicago-based bank, which became the first U.S. financial institution to launch a stand-alone Internet bank, plans to fold some 225,000 WingspanBank customers into its own services. WingspanBank, which cost some $150 million to build, had reportedly been losing money since its June, 1999 launch.
The move puts to end months of speculation about the future of WingspanBank since Bank One named former Citigroup executive Jamie Dimon as its chairman and chief executive last year. Dimon was brought in to overhaul Bank One after its First USA credit card unit sustained heavy losses.
"This will allow Bank One not only to better meet the needs of our customers but also to accelerate greater efficiency and profitability within all of Bank One's Internet operations," said Dimon of Wingspan's demise.
The opening of WingspanBank was heralded as a shrewd move by then-CEO John McCoy, who at the time saw guiding Bank One into the 21st Century where traditional branches would no longer be needed. Bank One was not the first financial institution to offer Internet banking to customers, but was the first to launch an entire different subsidiary that some speculated would later go public.
WingspanBank offered customers a variety of products, including mortgage, credit cards and traditional banking services. The online bank also boasted insurance services and financial planning products.
Bank One also said first-quarter net income was nearly flat from the year-earlier period as efforts to slash expenses met with resistance from ongoing problems with bad commercial loans. The reported net income of $679 million, or 58 cents per share, was down 1.5 percent from $689 million, or 60 cents per share, last year.
Bank One will transition WingspanBank.com customers to bankone.com this fall as it eliminates the expense of supporting another brand.
Shares of Bank One rose 1.7 percent after the announcement to $35.62.
