Citigroup Credit Card Portfolio

07:12:25 AM Thursday, February 14, 2008

Citibank Builds up Its Credit Card Business in Australia

Citibank, after incurring substantial losses as a result of credit card crisis, is taking all steps possible to strengthen its position on the US market and increase the share of its branches all over the world. The bank's intention to become major player becomes evident when you look at its booming activity in Australia, which is targeted at acquiring assets of big financial and banking businesses in the country.

Citigroup is adding 100,000 credit cards to its portfolio under the agreement with Suncorp Metway Limited, Australian finance, insurance and banking company.

Suncorp, Australia's sixth largest banking services company sells $230 million of credit card assets to Citi in the hope of increasing the size of its own portfolio due to the advantageous partnership with one of the US credit issuing giants.

The deal is expected to generate great revenues for both of the partners, Suncorp-Metway and the local arm of US-based Citibank will benefit from the partnership as the agreement will allow them to preserve the current loyal customer base and at the same time earn additional revenues from credit card commissions.

Suncorp will find more resources to provide its customers with renewed, world-class quality credit cards and will offer access to lavish rewards programs, such as rewards points, cash back, gasoline rewards and air miles.

Though all the credit card assets transferred to the Citibank's portfolio will bear the brand name of Suncorp, the US credit giant will be responsible for all the issuance and management-related issues. It means significant extension of business and a serious challenge to be a leader on the Australian credit card market.

All in all the deal with Suncorp is believed to increase the Citibank's share to up to 9% on the market. By-turn, Citi will provide for the inflow of profitable credit card deals for Australian customers and fix its positions as a new leader.

That is not all, however. The cards chief at Citibank Australia, Roy Gori expressed strong determination and continued attempts to carve out a still greater part of the highly competitive Australian credit card market.

What they do next is offer a contract of sale to the David Jones credit cards business which makes up about 30% of its revenues. If the agreement is signed, Citibank will make another significant step towards becoming a leader and will draw nearer to the Commonwealth Bank which ranks as the biggest share owner on Australia's credit card market. Currently, its share equals to 23%.

While the fate of this very transaction is not yet known, Australian customers may start preparing for Citibank's global rewards program and a world-class quality of credit card services on the whole.