Enhancing its presence in the central US, on Wednesday, MoneyGram International Inc. (MGI) announced its partnership with Citigroup Inc.’s (C) banking unit, Citi, in order to make its money transfer services available to all of Citi’s locations across the central US. These locations include Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. The alliance with Citi adds hundreds of agent locations in vital operating locations across US.
 
Concurrently, MoneyGram celebrates a global network of more than 200,000 agent locations with addition of its single retail super-agent SRD MP and its partner Bimedia in France to offer money transfer services to 2,500 tobacco shops across the country for next five years. This also creates strategic value for MoneyGram as this is the first non-bank partnership in France, indicating potential growth avenues for the company.
 
Money transfer business remains the driving force for MoneyGram. The company has been expanding its money transfer business across the globe through various recognized financial institutions. Further, operating on a balanced-expansion approach, MoneyGram reached a milestone by adding more than 2,000 agent locations in the Philippines alone, in 2009.
 
Additionally, MoneyGram has enhanced its operations in the vital growth economies by adding key institutions such as Canada Post in May 2010, Bank Asya in Turkey in March 2010, Bank of China in January 2010 and Alpha Bank in Serbia in December 2009, to name a few.
 
Besides, MoneyGram continues to avail fresh opportunities by exploring new locations and incorporating latest and flexible technology such as transfers through mobile phones, prepaid cards or ATMs, in order to speed up its money transfer services and enhance its remittance volumes.
 
However, MoneyGram has several issues to deal with in the near term, such as cost-cutting initiatives, debt-repayment strategy, utilization plans for cash and equivalents as well as generating sufficient cash flow for its operations. Unless these concerns are addressed, the company will continue to generate loss in its business.
 
Overall, though the current economic turmoil has weakened both the revenue growth and the operating leverage of MoneyGram, we believe that the company has the potential to overcome the impact of the volatile U.S. dollar against other currencies and additional losses in its investment portfolio, once the global economy rebounds to its historical highs.
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