Citibank (NYSE: C) is ending its 28-year-old ties to the world’s first credit card, Diners Club, by selling the unit to the Bank of Montreal (NYSE: BMO).
The sale of Diners Club to Bank of Montreal for an unspecified price will reduce Citigroup’s total amount of assets by about $1 billion. The sale represents about 1% of Citibank’s global assets of $1.89 trillion. Citi commented that the deal will not have a material impact on Citigroup’s net income or capital ratios.
Citigroup CEO, Vikram Pandit, has been moving to sell businesses that Pandit believes are non-essential to Citigroup’s core businesses of corporate lending, investment banking and retail banking operations in North America, Asia, and Latin America. The Diners Club North America unit is one of 21 businesses that were put into a division called Citi Holdings that Citi is trying to liquidate.
When the sale is finalized in early 2010, Citigroup will have exited all of its Diners Club-related businesses. The largest part of the business, Diners Club International, was sold to Discover Financial Services for $165 million.
Bank of Montreal said in its statement about the purchase that its new acquisition of Diners Club will more than double the size of its corporate credit card business, adding about $7.8 billion in card transactions and net receivables of $1 billion annually.
Diners Club began operations in 1950 when it was the first charge card that was used at restaurants in New York. Citigroup (then Citicorp) purchased Diners Club in 1981.
