June 15, 2010
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News: Citi Sells Canadian Card Portfolio
Citi Bank has been trying to sell off some of its weaker performing credit card portfolios over the past year but has little success. Experts say it's because the bank has been selective in how the portfolios are divided up so as not to package all of the less desirable one's into one portfolio. If Citi was going to sell off credit card portfolios, it was apparent to them that they must mix some of the weaker portfolios with some of the stronger ones. The bank's strategy has paid off. It announced on Monday that it will be selling its Canadian credit card portfolio to the Canadian Imperial Bank of Commerce (CIBC). The sale will increase the CIBC card portfolio to add MasterCard to its offerings and increase its card assets by 15 percent.
With the purchase of the Citi Bank Canadian portfolio, the CIBC will be the largest dual credit card issuer in Canada as it enables it to offer both the Visa and MasterCard brand. The selling price was not disclosed, however, reports indicate that the portfolio is worth over C$2 billion. Added to the already C$14 billion portfolio, CIBC moves to the top. Citi wanted to sell the portfolio to enable the bank to give greater focus to its commitment to expand its global banking, credit card transactions services, and private banking services. The portfolio contains a number of different Canadian brands including Petro-Canada.
CIBC has been aggressive in expanding its credit card portfolio over recent months. In March, the bank invested $150 million for a state in the Bank of N.T. Butterfield & Son, Ltd. which is expected to increase its presence in the Caribbean. A month later, at the end of April, CIBC purchased CIT Business Credit Canada from CIT Group Inc. which will allow it to grow its corporate lending business. The agreement will be a win-win situation for both banks as it allows each to focus on their core business and growth strategies.