Citigroup sells Diners Club to Discover
by Gill Montia
Story link: Citigroup sells Diners Club to Discover
Citigroup is selling Diners Club to Discover Financial, for $165 million.
The bank is undertaking a review of its retail business following the appointment earlier this month of Terri Dial, who will head the group’s worldwide credit card operations.
Diners Club was founded in 1950 as the world’s first independent credit card company and was acquired by Citigroup in 1981.
The disposal is aimed at cutting costs and increasing efficiency within Citigroup’s retail business, following losses related to sub-prime mortgages and other bad debt.
In 2007, Citigroup’s full-year profit fell by 51%, to $4.1 billion, and analysts expect further writedowns in the first-quarter of 2008.
Diners Club is accepted at more than 8 million locations in 185 countries and Discover expects the purchase to improve its presence among business travellers, particularly outside the North American market.
The transaction should add between $10 million and $15 million to the group’s annual pre-tax profit.
The acquisition should be formally completed within 90 days, after which Diners Club customers will be able to use their cards on the Discover credit network.
Last month, Discover sold its loss-making Goldfish credit card business to Barclays, for $70 million.