Citigroup to sell Brazilian consumer finance units to Itaú Unibanco for $1.37 bn

Itaú Unibanco Holding SA, Brazil's nation's biggest bank by market value, yesterday agreed to buy Citigroup Inc's Brazilian consumer finance units for 2.767 billion reais ($1.37 billion) in cash, in order to expand in the local credit card market.

Under the terms of the deal, Itaú will take over Banco Citicard SA and Citifinancial Promotora Ltda, as well as the Credicard card brand that has a credit portfolio worth
7.3 billion reais and 4.8 million clients.

The transaction includes 96 Credicard stores and approximately $3.260 billion in consumer loan balances as of 31 December 2012.

The transaction does not include Corporate cards, the Citi and Diners branded portfolios, and the Credicard Platinum portfolio (except for Exclusive), or Credicard American Airlines cards, which will be migrated to the Citi brand and will continue to be managed by Citi.

The sale is part of the New York-based bank's plan of selling non-core businesses in some key markets.

"Brazil is a very important growth market and is an essential part of Citi's Latin American footprint and global network. This transaction demonstrates how we are finding ways to optimize our businesses and focus on specific segments in the emerging markets, consistent with our global strategy," said Francisco Aristeguieta, CEO of Citi Latin America.

Post closing the transaction is expected to generate a gain on the sale of approximately $300 million after-tax, the lender said in a statement.

"We are strengthening our leadership in the consumer finance and credit card markets in which we have an ample portfolio of products and services and specialised at forms," said, Roberto Egydio Setubal, CEO of  Itaú.