American Express finalized plans this week to concentrate on its core credit-card and travel businesses by spinning off its Financial Advisors subsidiary in a tax-free distribution to shareholders.
Analysts applauded the gesture because profits generated by the company's financial services group lagged revenues stemming from its main business offerings.
American Express Financial Advisors, which yielded $7 billion of revenue in 2004, is scheduled to become an independent entity sometime in the third quarter. American Express netted $22 billion from credit card and travel services during the same period.
The financial group, which manages $410 billion for at least 2.5 million customers, is considered a heavyweight in the asset management industry. Company officials declined to say if or when the unit will jettison its American Express moniker.