August 31, 2009
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News: CitiGroup Sells Three CC Portfolios
Americans and credit card companies alike are fighting to survive the recession. Just as Americans have had to find "stuff" in their budget that needs to go, lenders need to find stuff on their balance sheet that has to go to. CitiGroup has taken the concept seriously. The major credit card company announced today that they have sold three of their North American card portfolios that have saddled the company with weak business and big losses. The name of the three groups were not released, however, the buyer was designated as U.S. Bancorp based out of Minneapolis. Like most lenders, CitiGroup has been scaling back on its credit card offers and cutting expenses by unloading assets that do not meet the criteria of its business statement and mission.
The three portfolios are not considered significant and amounts to nearly $1.3 billion of credit card debt. They are a part of the Citi Holdings division which houses its brokerage, consumer finance and troubled assets that are expected to be sold or eliminated. CitiGroup will continue to pursue the sale of the balance of those assets being held with Citi Holdings. The company's goal is to seek out opportunities that provide the greatest value for its stockholders. Citigroup owns portfolios that include the branded credit card operations of prominent retailers including Sears Holdings Corp, AT&T, Bloomingdales, Macy's, and Home Depot.
Under the terms of the agreement, CitiGroup will continue to manage the portfolios through the first and second quarter of 2010. No further details were released. CitiGroup is one of the nation's largest credit card issues. They averted complete collapse earlier this year when the company took $45 billion from the Federal Government bailout program. The investment gave the Federal Government 34% ownership and CitiGroup’s largest stockholder. Last month CitiGroup surprised Wall Street when it reported a second quarter $3 billion profit resulting from its sale of Smith Barney to Morgan Stanley.