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Citi to Sell Prepaid Card Services as Streamlining Continues

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Citigroup Inc. (C - Free Report) inked yet another deal in continuation with its efforts to boost returns by streamlining operations. The Wall Street banking giant is set to sell its institutional Prepaid Card Services to Germany-based payment and issuing company, Wirecard AG.

The deal includes transfer of around 120 employees to Wirecard and is expected to close in the fourth quarter 2016, subject to regulatory approvals.

Citi Prepaid card services have introduced more than 2,500 client programs, tied with top companies and brands across the world, mainly in North America. Notably, Wirecard will make its entry into North America though the acquisition.

CEO of Citi Holdings, Francesco Vanni d'Archirafi, stated, "This transaction is a positive outcome for our clients and employees of Citi's Prepaid Card Services, which will become part of an industry leader that is poised for growth. We are especially pleased that all Citi employees supporting this business will have the opportunity to join such an innovative company. Today's transaction marks yet another important milestone in our strategy to continue the reduction of assets and businesses in Citi Holdings."

We remain encouraged as Citigroup continues with its repositioning and restructuring initiatives while remaining focused on resolving several internal setbacks, including legal issues. We believe that these streamlining initiatives will bolster the company’s capital position, reduce expenses and drive operational efficiencies.

Notably, the company’s 2016 capital plan received the Federal Reserve’s approval.  The plan includes a threefold rise in its quarterly dividend to 16 cents per share from current pay out of 5 cents and a common stock repurchase program of up to $8.6 billion over four quarters beginning the third quarter of 2016.

Citigroup currently carries a Zacks Rank #5 (Sell). Some better-ranked stocks in the finance space include Franklin Flagstar Bancorp Inc. (FBC - Free Report) , Southern National Bancorp of Virginia Inc. and First Mid-Illinois Bancshares, Inc. (FMBH - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy).

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