NEW YORK (Reuters) - Citigroup Inc (C.N) said it agreed to sell its Diners Club North America credit card business to Canada’s BMO Financial Group (BMO.TO) as it sheds unwanted assets and focuses on its main units.
The agreement gives BMO exclusive rights to issue Diners Club cards in the United States and Canada. It will also more than double the company’s corporate card business, as many business travelers use Diners Club cards.
BMO -- also known as Bank of Montreal -- will add nearly US$1 billion of outstanding customer bills and US$7.8 billion of card transactions.
The terms of the transaction were not disclosed, but the companies expect the deal to close before the end of March, pending regulatory approvals.
Diners Club is part of Citi Holdings, a portion of Citigroup that includes troubled or underperforming assets that the New York-based bank hopes to sell or wind down. Citigroup’s main businesses, including retail and investment banking, are in an entity called Citicorp.
Diners Club offered the first charge card to be accepted by multiple companies, starting in 1950. Citi bought the business in 1981, and in 2008, sold the Diners Club charge card network to Discover Financial Services. (DFS.N)
Citigroup Chief Executive Vikram Pandit is casting offassets after the bank took $45 billion of taxpayer money in a series of federal bailouts.
The bank said the Diners Club transaction was not expected to materially affect its net income or capital ratios.
Under the agreement, Citigroup will continue to support the Diners Club business until it is fully integrated with BMO.
BMO said Diners Club represents a long-term strategic fit within its commercial card business and allows it to expand offerings to clients.
Citigroup shares closed Monday at $4.28 on the New York Stock Exchange. While those of Bank of Montreal closed at C$53.55 on the Toronto Stock Exchange.
Reporting by Jonathan Stempel and Euan Rocha; Editing by Lisa Von Ahn and Maureen Bavdek