By Rogerio Jelmayer
SAO PAULO--Citigroup Inc. (C) has put its Brazilian credit card
and consumer financial arm up for sale, seeking a deal that could
amount to 1.5 billion Brazilian reais ($765 million), according to
three bankers with knowledge of the process.
Citigroup, which has struggled to gain a significant foothold in
Latin America's largest economy, is looking to sell Credicard, the
credit card unit, and consumer financial arm Credicard
Financiamentos, according to the people. If completed, the move
would effectively mean that Citigroup would exit broad retail
operations in Brazil, a highly competitive market, to focus on
high-income customers and investment banking, they said.
According to Credicard's website, it has 4.7 million credit
cards issued that account for 10% of billing in the Brazilian
market. It has a further 2.3 million customers at its financing
arm, according to one of the bankers.
Brazil's largest banks, including state-run Banco do Brasil SA
(BBAS3.BR) and private-sector players Itau Unibanco Holding SA
(ITUB, ITUB4.BR), Banco Bradesco SA (BBD, BBAS3.BR) and Banco
Santander Brasil SA (BSBR, SANB11.BR, SANB3.BR, SANB4.BR) are
interested in participating, according to the three bankers, who
declined to be named. The bankers said that Brazilian investment
bank Banco BTG Pactual SA (BBTG11.BR) may also join the
bidding.
A spokeswoman for Citigroup said the bank doesn't comment on
market rumors. Press departments for Itau, Bradesco and Santander,
a unit of Spain's Banco Santander SA (SAN, SAN.MC), also said their
banks doesn't comment on market rumors. BTG Pactual press officials
couldn't immediately be reached for comment.
One of the bankers said that the credit card unit is an
appealing asset, but the financing unit is of less interest. "The
problem is that when Citi saw there were banks interested in
Credicard, it also put the financing arm in the same package," the
person said.
A timetable for the conclusion of a deal--details of which were
first published by Brazilian financial newspaper Valor Economico on
Wednesday--hasn't been set, although one of the bankers said he
believes it could be wrapped up by the end of March.
"From Citi's perspective, the sale is part of the bank's effort
to exit from areas that aren't considered core business, as the
bank is more interested in serving high-income customers in Brazil
and in investment banking instead of [being a] retail bank," said
one of the bankers.
The major Brazilian players, on the other hand, are keen to
expand into the fast-growing retail sector. Total credit in Brazil
at the end of January stood at BRL2.4 trillion, up 16% from January
2012. The size of the loan portfolio is equivalent to 53% of gross
domestic product.
"Itau Unibanco appears to be the favorite in this battle given
the fact that the bank knows Credicard very well," said another of
the bankers.
Credicard was first launched in 1970 and has been through
several major evolutions. Most recently, in 2006, Citigroup gained
full control of the firm when it bought out its partner in the
business, Itau Unibanco. Citi paid BRL280 million for Itau's 50%
stake. At the time, the Brazilian bank said it wanted to focus its
efforts on developing its own credit card division.
Write to Rogerio Jelmayer at rogerio.jelmayer@dowjones.com
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