There is more bad blood between Walmart and its former credit card issuer Synchrony.
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Shares of the lender sank after the retailer slapped the company with a hefty lawsuit alleging that Synchrony broke an “implied promise” that it wouldn’t harm Walmart’s ability “to receive fruits of the contract.” It is seeking at least $800 million in damages.
The two companies parted ways in July after Walmart chose Capital One to handle its private-label and co-branded credit cards. Since, the two have been negotiating whether to sell or retain the $10 billion in balances on Walmart’s portfolio.
|COF||CAPITAL ONE FINANCIAL CORP.||90.78||+1.53||+1.71%|
In a statement released Thursday, Synchrony said Walmart’s complaint is “completely baseless and without merit” and it intends to vigorously defend its position.
“This lawsuit is nothing more than an attempt by Walmart to exert leverage and avoid the contractually defined process for valuing the loan portfolio that Synchrony has serviced on behalf of millions of Walmart customers for the last 20 years,” the statement said. “It is unfortunate that, despite our good faith efforts to resolve this commercial dispute amicably and in accordance with the contract, Walmart walked away from discussions and rushed to file suit,” the company added.
In a statement to FOX Business, Walmart fired back with its own statement.
“Synchrony has failed to take responsibility for its actions. We fully expect Synchrony to manufacture counterclaims in an effort to shift the focus away from its own conduct.”
The legal wrangling is another blow to Synchrony, as its partnership with the retailer accounted for more than 10 percent of the interest and fees the bank earned on its loans last year, according to Bloomberg.
Synchrony was spun off from GE Capital in 2015 as the company moved to exit the financial services business.