CREDIT CARD NEWS
Advertising Disclosure
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from many credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.
Credit Card Applications » News » Other » GE Purchases Credit Card Assets from Citi

GE Purchases Credit Card Assets from Citi

October 24, 2010
Add to Favorites:

In an attempt to reduce its behemoth size and shed some of the debts and businesses it isn't able to manage, Citi group has sold 1.6 billion dollars worth of credit card assets to General Electric, according to a Wall Street Journal report. The 1.6 billion dollars of credit card assets do not seem to be a massive amount in the Citi's grand scheme of things, considering its actual size. The transaction might be relatively small, but one thing that is certainly considerable is the fact that the size of businesses and debts that Citi is trying to shed is down by more than 100 billion dollars from 582 in the second quarter of last year to the figure of 465 by June 30th of this year, representing a significant change.

Interestingly the credit card debt bought by GE, although controlled by Citi was not issued it by it directly and were for retail partner cards which usually witness a greater amount of delinquency and rates of default than the normal branded accounts of the company. Although the number of charge offs has declined for several months in a row now, the delinquency rates have been shown to decline as per the new statistics. The deal was announced by GE Capital which is a subsidiary of General Electric. The portfolio includes almost 3 dozen small sized to mid-sized retail partner cards which comprise of more than 18,000 retail locations. Currently the company is trying to gain consumer finance relationships in segments such as HVAC, Consumer electronics, flooring and home furnishings which are amongst the core segments of the finance business of GE Capital sales.

According to Mark Begor who is the CEO of GE Capital Retail Finance, the deal has been able to bring more high quality assets and merchant relationships to the core growth business. This sale of credit card assets or retail partner relationship seems to be a well planned strategy by CEO Vikram Pandit to reduce the size of the balance sheet and winding down the Citi Holdings Unit which is in a way a repository for all the non-core businesses of the company. A good example is the Student Loan Corporation, 4/5ths of which is owned by Citigroup after divesting 36 billion dollars in student loans to DFS which has resulted according to Citi, in an after tax loss of around 500 million dollars.

Add to Favorites:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.