Citigroup said it agreed to buy American Express' stockpile of U.S. credit card loans made to shoppers of Costco Wholesale, as the fourth-largest U.S. bank takes over a card partnership with the retailer. Terms were not disclosed.
The sale was prompted by Costco's move last year to switch its credit card partnership to Citigroup and Visa, ending a 16-year relationship with Amex. Investors have waited ever since to see what premium Citigroup would pay for the loans, Amex's biggest portfolio of debt from a co-brand deal, in order to start the partnership this year. Amex said in January it expected a gain of approximately $1 billion from a sale.
The deal is expected to be completed by midyear, when the bank can begin issuing Costco cards, New York-based Citigroup said Monday. The acquisition will not be material to Citigroup's 2016 earnings, the firm said.
"We are immensely pleased to have entered into an agreement to acquire the Costco portfolio," said Jud Linville, head of Citigroup's card operations. The big-box retailer has about 51 million members in the U.S., he said.
