June 10, 2010
-
News: Citi Looks To Dump CC Portfolios
What is Citibank doing with all those credit cards? Citi's card portfolios have not been performing very well and the bank is looking to dump some of those large and high risk assets. Problem is, during these difficult economic times, nobody wants to buy them. Financial institutions have become reluctant to invest in credit card portfolios because of their current volatile nature. Word around town is that Citi's trying to get rid of a bunch of "junk" and refuses to market the portfolios at reasonable prices. Spokeswoman for the bank, Shannon Bell had little to say about the situation but did note that Citi is focused on cleaning up its credit card portfolio.
Citi, who was once the nation's leader in issuing credit cards, has dropped to the third place slot just below Chase Bank and Bank of America. The bank reported net card losses during the 2010 first quarter of $1.9 billion; a difficult situation for Citi's Chief Executive Officer, Vikram Pandit as he attempts to re-invent company. As the Federal Reserve wraps up its review of the CARD Act and issues its final rules regulating credit cards, Pandit will need to find some creative ways to unload the bank's unwanted baggage if stockholders are to be appeased. That means looking for buyers who want to get a foothold on the card market in the U.S.
A large portion of Citi's unwanted card portfolios are retail branded which have historically performed poorly. Brands included in the bank's credit card portfolio are Sears, Macy's and Home Depot. Although the bank continues to carry accounts receivables for Home Depot cards, customers lost their card last fall when closed out all cards from further use. Meanwhile, as Sears and Macy's await the fate of their card business, Citi continues to hold tight to its selling requirements which appear to be holding back any future sale. However, since the bank has other better performing assets, the bank can afford to hold out for the best possible deal and Sears and Macy's customers can continue to reap the benefits of Citi Rewards.