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Citibank Acquires Best Buy Card Portfolios From Capital One
February 20, 2013
On Tuesday, Citibank announced an agreement to acquire the Best Buy private-label and cobranded card portfolios from Capital One. Both parties expect the deal to close in the third quarter of 2013, and Capital One expects to receive an amount approximately equal to the book value of the portfolio.
From the Citibank press release:
"This will add another premier retail franchise and high-quality card portfolio to Citi Retail Services and significantly expand our already strong position as a market leader in North America," said Bill Johnson, CEO of Citi Retail Services.
"Best Buy is the leader in consumer electronics and we are excited to partner with them. We look forward to leveraging Citi's capabilities and expertise to grow and enhance Best Buy's relationships with their loyal and valued customers."
The value of a card portfolio is derived from the retailers included, the mix of cobrand and private label cards, the percent of doubtful accounts, and expectations about future portfolio performance.
Two other recent private-label acquisitions: Target sold their remaining stake in the retailer’s private label and cobranded portfolios to TD bank in October 2012 for an amount equal to the gross value of receivables. HSBC sold their entire private label business to Capital One in August 2011 and received about an 8% premium to the gross receivables.
to read more from the Citi press release.
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