November 27, 2009
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News: Citi Sells Diners Club North America
In response to an embarrassing situation, businessman Frank McNamara developed the world's first independent credit card. In 1950, Mr. McNamara launched the Diners Club card. The ground breaking idea came to him after leaving his money in another suit pocket while dining in a Manhattan restaurant. Citibank announced earlier this week that they will be selling the company's Diners Club North America credit card operations to the Bank of Montreal. After 28 years, Citibank will sell the operations as part of a plan to cut expenses and shed "non-core" businesses. The Diners Club is part of the Citi Holdings division which consists of 21 business portfolios that Citibank plans on selling. The giant lender sold off its International Diners Club credit card operations last year to Discover Financial.
Citigroup will support the North America Diners Club for the next few months while the Bank of Montreal prepares to take over the operations. Diners Club North America credit cards accounts make up a mere 0.05 percent of Citi's total assets of nearly $1.89 trillion worldwide. The selling price was not disclosed, however, it is speculated that the deal will add $1 billion to the Bank of Montreal's account receivables and nearly double their card business by adding $7.8 billion to the pot. The deal will also provide the Bank of Montreal with the exclusive rights to provide Diners Club's credit cards to corporate and professional accounts in the U.S. and Canada.
Citigroup will continue to market its co-branded MasterCard and Visa cards. Citigroup is a global credit card giant with over 200 million card customers in more than 100 countries. Frank Techar, the Chief Executive Officer for of Montreal stated that the Diners Club purchase will magnify the bank's competitive edge and position it at one of the top providers of cards in North America. The acquisition is expected to be completed by March of 2010.