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Citi to Vend APAC Merchant Acquiring Business to Wirecard

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Citigroup Inc. C 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 Asia Pacific (APAC) customer portfolio for merchant acquiring to Germany-based payment and issuing company, Wirecard AG.

The deal includes the entire customers for merchant acquiring services in Singapore, Hong Kong, Macau, Malaysia, Taiwan, Indonesia, Philippines, Thailand, India, Australia and New Zealand. Notably, the customer portfolio of Citigroup's merchant acquiring business in 11 markets in APAC includes over 20,000 merchants. These merchants are in airlines, financial services, luxury goods, retail, along with technology and telecommunications.

The deal is expected to close by Jun 2018, in stages. Financial terms of the transaction remain undisclosed.

“This sale is consistent with Citi’s strategic objective to efficiently allocate resources to grow our core businesses and products. The sale of the Merchant Acquiring businesses in Asia is consistent with our global strategy, whereby Asia is the last remaining region in Citi with Merchant Acquiring businesses. We are pleased to have reached this agreement with Wirecard who will invest further in what is a core asset for them,” said Sean Hesh, Citi’s Asia-Pacific Regional Head of Merchant Acquiring.

Citigroup exited its merchant acquiring businesses in other regions in 2005. Asia is the last market from where it plans to exit. The company's long-term strategy to prune non-core assets and increase its fee-based business mix is likely to improve valuation over time.

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

Last week, Citigroup also completed the vending of its institutional Prepaid Card Services to Wirecard. The deal was signed in Jun 2016.

Citigroup currently carries a Zacks Rank #3 (Hold). Shares of the bank gained 30.7% over the last six months; underperforming the 34.8% growth for the Zacks categorized Banks – Major Regional industry.

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