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Coles to sell its credit card business to Citi for $880m

24 November 2016

Wesfarmers has agreed to the sale of its Coles credit card business to Citi for $880m, with an announcement on November 17th 2016 that they are entering a 10-year deal with Citi to distribute its Coles-branded credit cards.

Under the terms of the deal, Citi will manage the credit card business and acquire the $880 million credit card portfolio, whilst Coles will receive a share of risk-adjusted revenue.

The sale is a significant shift in strategy for Westfarmers, whose Coles division became the first Australia supermarket to fund its own financial services arm last year when it took full control of the business from GE Capital.

Wesfarmers managing director Richard Goyder said the deal would allow Coles to "enter the next phase of growth" for the credit card business.Coles and Citi agree to credit card deal

Coles managing director John Durkan said the supermarket, in partnership with Citi, would "continue to provide simple and competitively priced products" for Australian consumers.

Coles has more than 1 million customers across its credit card and car and home insurance businesses, whilst Citi is the 5th largest credit card provider in Australia, with the top 4 spots taken by the big four banks.

Citi Australia chief executive David Livingstone said the agreement reflected the company's strategy to grow its credit cards business in Australia.

Coles moved to 100% ownership of its credit card business in May last year when they acquired GE Capital's 50 per cent stake in the business. This purchase was triggered by the $8.2 billion sale of GE Capital's consumer finance business to a consortium led by KKR.

Wesfarmers confirmed they expected the acquisition by Citi to be completed by February 2017, pending Foreign Investment Review Board approval.

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