SAO PAULO (Reuters) - Citigroup Inc’s (C.N) Brazilian unit plans to sell its Credicard consumer finance unit as part of an effort to focus business on the most profitable areas, Valor Econômico reported, without saying how it obtained the information.
Citigroup made available some preliminary information on the unit to potential bidders through a data room, Valor said. There is still no estimate of the value of Credicard, which is a consumer finance company focused on low-income households, the newspaper reported.
A public relations executive for Citigroup said the bank does not comment on market speculation.
Last year, HSBC Holdings Plc (HSBA.L) gave up on its sale of a similar unit, Losango. The business model of consumer finance companies such as Credicard and Losango is losing appeal after interest rates fell to record lows and as borrowers scale down the use of pre-dated checks to pay for loan installments.
In a recent interview with Valor, however, Helio Magalhães, Citigroup’s chief country officer, said a sale of Credicard was not in the cards.
Credicard has more than 7 million clients, according to Valor, and could generate interest from some of Brazil’s largest banks such as Banco Bradesco SA (BBDC4.SA), Banco Santander Brasil SA (SANB11.SA) and state-run Banco do Brasil SA (BBAS3.SA).
The brand is also associated with the issuance of credit cards, which could attract players such as Banco PanAmericano SA, a unit of investment banking giant BTG Pactual Group BBTG11.SA, Valor added.
Citigroup in 2006 paid 280 million reais ($139 million) for the 50 percent that it did not already own in Credicard, buying out its longtime partner Banco Itaú Holding Financiera SA.
Reporting by Guillermo Parra-Bernal; editing by Jane Baird