|
Citi to sell Diners Club to BMO
By Sam Mamudi, MarketWatch
Last Update: 8:36 AM ET Nov 24, 2009
NEW YORK (MarketWatch) -- Citigroup Inc. took another step in repairing its battered balance sheet on Tuesday, as it reached a deal to sell its Diners Club North American card franchise.
Citi C will sell the business to BMO Financial Group BMO.
While terms of the deal were not disclosed, Citi said the sale will reduce its assets in its Citi Holdings unit by $1 billion, and will not have a material impact on its net income or capital ratios.
The deal gives BMO exclusive rights to issue Diners cards in the U.S. and Canada. It is expected to close by the end of the first quarter of 2010.
"The sale of this business is consistent with Citi's strategy to optimize the assets and businesses within Citi Holdings while working to generate long-term profitability and growth from Citicorp, which comprises its core franchise," said Citi in a statement. "Citi continues to make progress on its strategy and will continue to pursue opportunities within Citi Holdings that create the most value for stakeholders."
BMO said the deal will more than double its corporate card business. It added the agreement represents net receivables of almost $1 billion and approximately $7.8 billion in card transactions.
The sale is the latest in a series of sales and spin-offs of Citi assets, as the bank seeks to trim its holdings and streamline its business.
On Oct. 9, Citi agreed to sell energy-trading unit Phibro to oil company Occidental Petroleum, while on Nov. 5 its Primerica Inc. financial services arm filed for an initial public offering.
On Nov. 15, Citi reach a deal to sell its 93.5% holding in Bellsystem24, a Japanese call center operator, to Bain Capital for $1 billion.
Citi's stock was down a fraction in pre-market trading Tuesday. The shares are down more than 35% this year, though they are up nearly 5% in November.
|