Citigroup, Inc. (C) has sold off a part of its Diners Club credit card processing business to Elavon, a subsidiary of US Bancorp (USB), as it continues to rid itself of unwanted assets.
Elavon acquired Citibank’s Diners Club Card merchant-location portfolio in Western Europe, which represents more than 75,000 merchants. Small and mid-size businesses that accept Diners Club cards in the region will now process their transactions through Elavon. Terms of the deal were not disclosed.
Separately, Elavon has also signed an agreement with Diners Club International, a unit of Discover Financial Services (DFS). The agreement will enable Elavon to provide processing, funding and customer support services for merchants that accept Diners Club International cards in the U.K., Ireland, France, Switzerland and Germany.
Citigroup, once the largest U.S. bank by assets, fell behind last year after a series of acquisitions by rivals. The bank has been severely hurt by billions in losses and write-downs of problem loans and toxic assets.
During the second quarter of 2009, Citigroup reported results separating the firm into Citicorp and Citi Holdings. The company is currently undergoing a major restructuring in its businesses and plans to hold down its assets and divest non-core businesses in Citi Holdings.
The U.S. government injected $45 billion in bailout funds into the bank, $25 billion of which was recently converted to a 34% ownership stake. Top-level management at the company is conceiving plans to downsize the government’s stake in the company through a multibillion-dollar stock offering.
Last week, Citigroup also decided to scale back its U.S. retail footprint to just six major metropolitan areas and limit lending mostly to wealthy customers.
Citigroup will release its third quarter 2009 earnings on Oct. 15, 2009 with a conference call scheduled later in the day to discuss its results. Ahead of its results, we maintain our Neutral recommendation on the stock.
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Read the full analyst report on “DFS”
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