FRAMINGHAM (03/22/2000) - Bank One Corp. is reportedly looking to sell off its fledgling Internet venture WingspanBank.com, which has turned out to be a financial drain for the Chicago-based financial institution.
A company spokesman refused to confirm or deny a report that Bank One has hired New York investment bank Morgan Stanley Dean Witter & Co. to explore its options with Wilmington, Del.-based Wingspan. However, he did say that the bank is looking to strengthen its overall financial position.
"In January, we said we were reviewing all of our lines of business and looking at our strategic options, and that includes Wingspan," said Thomas Kelly, a spokesman for the nation's fourth-largest bank. "We're looking at the year 2000 to rebuild investor confidence."
Word of a possible sell-off confirms what some analyst have been predicting for the troubled bank. Last year, Bank One faced financial woes at its First USA Bank NA unit and missed its earnings targets for 1999, leading some analysts to speculate that Bank One would clip its investments in Wingspan .
Last fall, the bank fired First USA CEO Dick Vague, an advocate for the Internet bank. A few weeks later, Wingspan CEO James W. Stewart III resigned.
"Bank One is retrenching. They're trying to fix the core franchise . . . and (Wingspan) isn't part of that," said Jaime Punishill, an analyst at Forrester Research Inc. in Cambridge, Mass.
With Wingspan's chief advocates gone, Bank One can cut its costs for the purely Internet bank, said Punishill. "That's what happens when you don't organize your dot-coms correctly," Punishill said.
Joan Goodman, an analyst at Donaldson Lufkin & Jenrette Inc. in Chicago, said part of the problem can be attributed to Wingspan's slow customer growth. Since its much-ballyhooed launch last June , Wingspan has acquired only 107,000 customers.
"Bank One went after it in a big way," said Goodman. "(But) they didn't get the customers they needed."