In the UK, things have never been worse for Capital One, the US giant that is one of the country's largest credit card issuers.
But as Sanjiv Yajnik, head of the company's UK and European operations, delivers his appraisal of the record number of personal bankruptcies and credit card non-payments that has shaken the industry, he remains remarkably unflustered. "This is unprecedented in UK history, and its going to get worse before it gets better," he says coolly. "We understand this game. It is a cyclical business. We will get through it."
Indeed, the company's executives back at its base in Virginia are not likely to be too worried about whether Yajnik, 49, can steer the UK business though these tough times. After all, he has stared down some decidedly dire situations. Prior to Capital One, he spent more than a decade in shipping. "I've lost some of my colleagues at sea. I faced some pretty tough circumstances, when engines are shutting down in a storm in the middle of the Atlantic," he explains. "All you have are the people on board and your wits to carry you through."
Sitting in a sun-splashed corner conference room at Capital One's Euston Road offices in London, Yajnik waxes nostalgic about his early career at The Shipping Corporation of India in Bombay, and later at Mobil Oil (now ExxonMobil). A marine engineer by training, he started out designing and operating ships, enabling him to travel the world. "I've worked in more places than you can wave a stick at," he says. As a fresh-faced graduate from engineering school, he found himself in the awkward situation of giving orders to hard-boiled sailors many years his senior.
"There are some really tough folk in shipping. It was very exciting, but you had to learn how to influence people and when to take a stand."
The world in which he now operates must seem staid by comparison, even if the consumer credit industry is dealing with an unprecedented downturn. The Government is increasingly worried about the rise of those in financial trouble, and the Bank of England's decision to increase interest rates could push even more to the brink. Recently released figures from the Bank showed that a record 26,021 people declared insolvency in the second quarter of this year, raising fears that personal insolvencies across 2006 could breach the 100,000 barrier for the first time.
Capital One reported glowing results last month that were dulled only by the UK business. Yajnik admits, "We are taking charges as a corporation against the business in the UK", yet he seems to take it all in his stride.
Credit card issuers and high street banks have taken a beating not only on their balance sheets, but in public opinion - critics say they are reaping what have sown after years of aggressively giving credit to people they shouldn't have. So do Capital One and its competitors bear some responsibility for the thousands that are struggling under a total debt of more than £1 trillion. "It's a difficult question," Yajnik demurs. "We need to lend responsibly, because that is the cornerstone of a strong financial system in a country. Competition and the democratisation of credit are really good."
In 10 years Capital One has taken a big chunk of the credit card market from high street banks to become the UK's sixth largest credit card company.
Capital One was started in the early 1990s by a pair of consultants who had noticed that when it came to credit cards, the big banks in America offered little variation and generally charged the same price for cards. Instead, Capital One offers a "mass customisation" model. It harnesses the reams of publicly available data and individual credit information to offer targeted products to a wide spectrum of potential customers. Yajnik was lured to the company in 1998 by, he says, a "feeling of destiny" that imbued the then three-year old business. He had long since left shipping, having hung up his sailor's cap in 1990 to go to business school in Canada. That landed him a job at PepsiCo as the head of California, hawking tacos and fried chicken though its fast food restaurant business. He later moved on to the US consumer electronics giant Circuit City before joining Capital One in the US. He came to the UK last year.
Capital One's growth has been impressive: it became a Fortune 500 company is less than a decade. The UK is its biggest business outside the US, with $8.2bn (£4.2bn) in managed loans as of 2005, up from just $1.4bn in 1998. It has 8 per cent of the market, nipping at the heels of its nearest rivals, NatWest and Halifax, each of which issue 10 per cent of the country's credit cards (Barclaycard is by far the biggest provider, with a 23 per cent market share).
Like its competitors, the company must walk a fine line now between tightening its credit-granting criteria and not denying too many potential new customers. "The key thing is to be contained and clear about what it is we need to do so we can look back and be proud of our actions when we come out on the other side of this," says Yajnik.
The company's mass-customisation model that has fuelled the company's growth has, in the UK, begun to show some holes. "Now that we're in a downturn we are seeing things in the profiles of people getting into trouble that we previously didn't see," Yajnik explains. "We are cutting out whole slices of people." He also says that there has been a "psychological shift" here that has reduced the stigma of filing for insolvency.
Despite the choppy waters, Yajnik is still a believer. "We see ourselves as challenging the market for the sake of the customer," he enthuses. And does he aspire to see Capital One bump Barclaycard from its perch? "I have a different aspiration. I want to be a bona fide consumer franchise in a diversified way, giving clear options to customers that they love."
Yajnik's remit is Europe, and the long-term plan is to use the UK as a platform to expand on the Continent. First, however, he must steer its UK business clear of the rocks and back into calm seas.
BORN 5 September 1956
EDUCATION studied at the Marine Engineering College, India; MBA from University of Western Ontario, Canada; MBA from Stanford University, US
1977: chartered engineer, the Shipping Corporation of India, Bombay
1983: chief engineer, Mobil Shipping & Transportation Co, London
1992: market manager, PepsiCo, California
1996: general manager, Circuit City Stores
1998: director, Capital One
2000: vice-president, Capital One
2005: executive vice-president, Capital One UKReuse content