June 14, 2010
Citi sells Canadian Mastercard business to CIBC
TORONTO--Citi Cards Canada Inc. has agreed to sell a substantial portion of the assets comprising its MasterCard credit card business to Canadian Imperial Bank of Commerce. Citi Cards is the administrative agent of Broadway Credit Card Trust and the seller and servicer under Broadway's securitization program.
Completion of the sale transaction will be subject to Citi Cards obtaining necessary regulatory approvals, to certain closing conditions for the benefit of CIBC or Citi Cards, and to the satisfaction of certain other conditions, including obtaining required consents to proposed changes to Broadway's securitization program. Such changes are proposed to include:
- The assignment to CIBC of Citi Cards' rights and obligations under
the securitization program as and from the closing of the sale
transaction, including as the seller and servicer of the pool of
receivables and other financial assets (the "Pool") backing
Broadway's outstanding debt securities, and as Broadway's
- Steps to improve the overall performance of the Pool, including the
removal from the Pool of certain non-performing accounts.
It is anticipated that these and other proposed changes will be described in an information circular to be prepared by Broadway in connection with obtaining the required consents and approvals, which would be made available to Broadway's investors. Implementation of the proposed changes to the securitization program at closing would be subject to certain requirements applicable under the securitization program, including that the proposed changes not result in a reduction or withdrawal of the ratings ascribed to Broadway's rated debt securities.
Citi Cards will remain available for a period following the closing of the sale transaction to provide portfolio and securitization services, as a sub-servicer and as a sub-administrative agent on behalf of CIBC, and to assist with the transition of servicing and administrative activities to CIBC.
Terms of the sale were not disclosed. The sale will reduce Citi's assets in Citi Holdings by approximately $2 billion (Cdn) and is not expected to have a material impact on Citi's net income or capital ratios. The transaction is expected to close by October 31, 2010, and is subject to regulatory approvals and usual closing conditions for such sales.
"This transaction demonstrates the continued progress we are making in our efforts to divest non-core assets," said Vikram Pandit, Chief Executive Officer of Citi. "Our team continues to pursue opportunities to reduce assets in Citi Holdings in a way that will create value for our stakeholders."
"Citi remains committed to delivering on its global strategy in Canada which includes a focus on the growth of our core businesses," Mr. Pandit added. "With this sale behind us, we will continue to focus on growing our Global Banking, Global Transaction Services and Citi Private Bank organizations, leveraging Citi's unique global reach to the benefit of our clients."
The sale of this business is consistent with Citi's strategy to reduce the assets and businesses within Citi Holdings in an economically rational manner while working to generate long-term profitability and growth from Citicorp, which comprises its core franchise.
Citi, the leading global financial services company, has approximately 200 million customer accounts and does business in more than 140 countries. Through Citicorp and Citi Holdings, Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management. In Canada, Citi employs approximately 4,600 individuals across the country in a range of consumer and institutional businesses.