US stock market trading in internet-only credit card company NextCard was halted on Friday and will not resume until additional information from the company is provided, according to Nasdaq officials.
The day before, federal bank regulators had closed NextBank, the largest marketer of credit cards over the internet and a unit of NextCard. The closure took place after the bank failed to identify extensive credit quality problems.
The US Office of the Comptroller of the Currency, which regulates nationally chartered banks, said in a statement that it closed down NextBank after discovering it "was operating in an unsafe and unsound manner".
In addition, the Office of the Comptroller appointed the Federal Deposit Insurance Corporation as receiver to protect depositors.
According to the comptroller's office, the bank used inadequate risk management policies and procedures, and its assets fell to levels lower than described in the original business plan.
NextBank had about $700m of assets and $550m in deposits from 4,400 depositors.
NextCard markets credit cards over the internet and issues secured cards with low lines of credit guaranteed by a deposit account at NextBank. The move leaves NextCard without the backing of the bank, which is needed to issue credit cards.
"In light of this announcement, the company will re-evaluate its business and operations strategies," NextCard executives said in a statement.
On 29 January NextCard said it laid off 170 employees, or 19 per cent of its workforce. The company employed about 900 workers before the reductions.
Last October, NextCard hired Goldman Sachs to sell the company, but NextCard was unable to find a buyer for its business after a three-month search.
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