Citigroup Inc. (C Quick QuoteC - Free Report) has completed the acquisition of U.S. co-brand credit card portfolio of Costco Wholesale Corporation (COST Quick QuoteCOST - Free Report) from American Express Company (AXP Quick QuoteAXP - Free Report) . The bank has acquired over $10.5 billion of credit card receivables.

Financial terms of the deal remained undisclosed. However, the New York-based banking giant stated that it does not expect the acquisition and conversion to have any material impact on its 2016 earnings.

From now on, the new Costco Anywhere Visa Card and Costco Anywhere Visa Business Card by Citigroup are accessible to Costco members.

The deal does not come as a surprise as American Express, which has been Costco’s exclusive credit card partner since 1999, announced last year that they were terminating their relationship as both parties failed to reach an agreement on renewal terms.

In Mar 2015, Costco announced a deal under which Citigroup would be the exclusive issuer of its co-brand credit cards in the U.S. and Visa Inc. (V Quick QuoteV - Free Report) would replace American Express as the card network. Costco at that time also noted that the materialization of these agreements were subject to the acquisition of its existing co-brand credit card portfolio by Citigroup.
 
For Citigroup, one of the largest issuer of consumer credit cards in the world, the deal seems to be a strategic one. The company earlier revealed that its key planned investments for 2016 are tied with US cards including the Costco portfolio acquisition and renewing a number of partnership programs. While the investments are aimed at growing the cards business, it is most likely to impact the company’s results in the near term to some extent.

Citigroup currently carries a Zacks Rank #4 (Sell).

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