Last week, Citigroup Inc. (C - Free Report) completed the acquisition of Best Buy Co., Inc.’s (BBY - Free Report) U.S. credit card portfolio from Capital One Financial Corp. (COF - Free Report) . Consequently, the credit card portfolio was successfully integrated into Citigroup’s system. The portfolio is presently worth approximately $6 billion in receivables. Citi Retail Services – Citigroup’s credit card unit – that provides service and solutions to U.S. retailers, will supervise the portfolio from now on.
Citi Retail Services offers consumer as well as commercial credit card products, services, and retail solutions to national and regional retailers throughout the U.S. The business serves roughly 90 million accounts for a number of premier brands.
The transfer of Best Buy’s card portfolio within a short span of 7 months to Citigroup shows Best Buy’s eagerness to offer unmatched service and financing options to clients. As part of this switch, Best Buy will also be able to strengthen its customer loyalty program – which is already quite popular in U.S.
For Citi Retail Services, the addition of Best Buy’s credit portfolio reinforces its position as a chief provider of private label and co-branded card products to clients. The business services accounts for a number of major brands, including ExxonMobil (XOM - Free Report) , Macy's (M - Free Report) , Sears , Shell (RDS.A - Free Report) and The Home Depot (HD - Free Report) . Best Buy’s leadership position in consumer electronics, combined with Citi’s expertise, will likely enable better service for customers.
Citigroup's cards segment Citi Retail Services has now been able to reinstate its former image post the financial crisis in 2008. Consequently, the bank reverted its earlier intention to sell some of its assets. In 2011, Former Citigroup CEO Vikram Pandit moved the Citi Retail Services unit out of the Citi Holdings division.
We believe the the transition of Best Buy’s credit card portfolio to Citigroup will enhance the top line for the New York-based bank amid the sluggish macro environment in the U.S.
Currently, Citigroup carries a Zacks Rank #3 (Hold). A better-performing bank is BankUnited, Inc. (BKU - Free Report) , which carries a Zacks Rank #1 (Strong Buy).