Citigroup Inc. has entered an agreement to buy the Best Buy private-label card portfolio, which has about $7 billion in loans, from Capital One Financial Corp. Citi has also agreed to issue and manage new Best Buy-branded cards in the U.S.
The sale of the accounts "will approximate the book value of the accounts," Capital One said in a press release Feb. 19. As such, the McLean, Va., issuer expects "no significant gain or loss on the transaction," it says. The sale provides an early end to the contractual agreement between Capital One and Best Buy.
Citi expects both deals to close in the third quarter of this year. The New York-based issuer does not expect the transactions to be material to its earnings this year, it said in a separate press release.
"This will add another premier retail franchise and high-quality card portfolio to Citi Retail Services and significantly expand our already strong position as a market leader in North America," says Bill Johnson, CEO of Citi Retail Services, in Citi's release. "Best Buy is the leader in consumer electronics and we are excited to partner with them. We look forward to leveraging Citi's capabilities and expertise to grow and enhance Best Buy's relationships with their loyal and valued customers."
Citi Retail Services also serves Home Depot, Macy's Sears, Shell and ExxonMobil, the bank said in its release.
Bill Cilluffo, Capital One's executive vice president of card partnerships, says in Capital One's release that the issuer has "a great portfolio of partners."
"Our partnerships business continues to deliver strong contributions to our results and serves as a platform for future growth potential," he adds.
The argument that a cardholder signed an installment sales agreement has no legs either. It's a CREDIT CARD APPLICATION - nothing more or less.
HSBC was famous for this w/ Best Buy, and Sears, when it had a store card printed the PMSI language on each receipt. Problem there was that even Ass't store managers couldn't explain what it really meant. (and repo paint on a house is difficult.
richard.isacoff@gmail.com