Barclays plans to take over Citibank’s Italian credit card business in a deal the United Kingdom-based issuer announced Thursday. The acquisition will cover approximately 197,000 credit card accounts and assets of approximately 234 million euros (US$ 318 million), almost all of which is outstanding credit card debts.
As part of the acquisition, 40 Citi employees will transfer to Barclays, bank spokesperson Sarah MacDonald tells PaymentsSource. The Citi card portfolio will be rebranded “progressively over time,” she says.
MacDonald declined to disclose how much Barclays is paying for the acquisition or how it might change the card operations in Italy. “We are still at an early stage and not in a position to provide detailed operational plans for the business,” she says.
Barclays will integrate the new cards and employees into its existing Barclays Italy business, which is part of Barclays Global Retail and Commercial Banking–Western Europe. The issuer previously had “a relatively small market share in credit cards in Italy,” MacDonald says. “The acquisition of the Citi portfolio will yield further benefits as well as additional market synergies,” she says.
The deal still requires regulatory approvals and union discussions, but Barclays expects to complete the transaction by the end of next month.
“The deal will create significant scale for continued growth and development,” Leo Salom, CEO of Barclays Global Retail and Commercial Banking–Western Europe, said in a statement.
Citi is getting out of the Italian credit card business, according to an industry source. A Citi spokesperson says Citi has been in Italy for more than 90 years and will continue its other operations in that country, including investment banking.
Citi’s decision to sell of its Italian credit card operation was “in line with Citi’s goal to reduce assets in an economically rational manner,” the company said in a statement. Citibank parent Citigroup Inc. reported a $1.9 billion net loss last year, prompting the company to make significant cuts.
“We reduced the size and scope of the company,” said Citigroup CEO Vikram Pandit in a Jan. 19 statement. This included getting rid of nonstrategic business lines, reducing headcount by 100,000 and cutting more than $13 billion in annual costs, he said.
Citigroup had total assets of $547 billion as of the end of 2009, a 39% drop from a peak of $898 billion in the first quarter of 2008.
Barclays Bank Plc is the second-largest UK bank with 1.55 trillion pounds (US$2.42 trillion) in assets as of June 2009.
