Retail Industry News
Citi finds few buyers for unwanted retail cards
Friday, 11, June 2010
Buyers are reluctant to buy credit card assets of any kind now, because regulators are revamping rules for the industry, making profits more difficult to forecast.But the portfolio that Citigroup is selling is particularly difficult to unload, in part because it is big and because these types of cards are prone to higher-than-average losses.Citigroup once prided itself on being the industry leader in store cards, but in the first quarter of 2010, the bank's unwanted credit card businesses had net credit losses of $1.9 billion.
The unwanted credit card assets include retail credit cards and about $5 billion worth of other partner cards.Citigroup is not willing to accept fire-sale prices that would-be buyers want, according to two people briefed in the matter who were not authorized to discuss it.Industry analysts and portfolio brokers said this kind of situation is common now."What Citi's trying to unload is some junk, and junk takes a lot longer to sell," said Robert Hammer, the chief executive of R.K. Hammer Investment Bankers, which brokers card portfolio sales and has managed private label credit card companies.
