Citibank (NYSE: C) has sold part of its Diners Club credit card processing business to a subsidiary of US Bancorp (NYSE: USB) as part of an attempt to slim down and generate new capital.
Elavon, which is part of U.S. Bancorp, acquired Citibank’s Diners Club “merchant location” portfolio in Western Europe, which represents over 75,000 businesses according to the Atlanta-based payment processing company. Small and mid-size businesses that accept Diners Club cards in the region will now process their transactions through Elavon, according to a statement from the company. A U.S. Bancorp spokeswoman declined to disclose any terms of the deal.
Elavon has also signed a deal with Diners Club International, which is a unit of Discover Financial Services (NYSE: DFS). The Discover deal calls for Elavon to provide processing services, funding and consumer support services for businesses and other merchants that accept Diners Club international cards in the United Kingdom, France, Benelux, Switzerland and Germany.
Following the announcements, Citibank shares rose 2% to $4.47 on Monday. These two sales are part of ongoing effort by Citibank’s parent company, Citigroup, to divest itself from what are considered non-core assets that have been placed in its Citi Holdings’ portfolio. Citigroup has been under increasing pressure to “slim down” to generate new capital that can be used to reduce its obligations to the U.S. federal government.
