Magazine article American Banker

Citi's Sony Portfolio Sale to Bank One Confirmed

Magazine article American Banker

Citi's Sony Portfolio Sale to Bank One Confirmed

Article excerpt

Citigroup Inc. sold its Sony Corp. credit card portfolio, which has $1.5 billion of receivables, to Bank One Corp. in July, the companies have acknowledged.

The transfer points to diverging strategies in cobranding between the two major issuers, some experts say. Citi, which has recently picked up deals with Home Depot Inc. and Sears, Roebuck and Co., has said it intends to do heavy promotions for the select retailers with which it does business.

Bank One, on the other hand, seems eager to highlight the breadth and diversity of its cobrand and affinity products, not just its splashy deals with such companies as Starbucks Coffee Co. and Walt Disney Co.

Citi's third-quarter earnings announcement Monday slipped in the fact that it had lost a renewal bid to manage its 5-year-old Sony credit card cobrand. In addition to losing the rights to market new cards for the Tokyo entertainment conglomerate, Citi sold the loans to the new issuer, Bank One.

The companies declined to discuss the arrangements in detail. But on Monday, in response to an analyst's question about lower-than-expected receivables growth, Citi chief financial officer Todd Thomson acknowledged that the sale of its Sony card receivables was a factor, in addition to its pullback on teaser 0% interest rate offers.

"We had a cobrand card with Sony. They ran a competition that we competed for and [Sony] gave the business to another competitor," Mr. Thomson said. Citi's sale of its existing receivables to the winning bidder, which Citi was careful not to name, is consistent with the industrywide practice in such cases, he said.

Though Bank One did not announce the Sony contract in posting its third-quarter results Tuesday, a spokesman for the Chicago company acknowledged the deal. "Bank One and a subsidiary of Sony Corporation of America have entered into a relationship. We are currently working out details and will have more to say in the coming months," spokesman David J. Chamberlin wrote in an e-mail message Monday.

A Bank One Sony card has not yet been announced, but a Sony spokeswoman said she expected a product introduction in early 2004. Citi's contract expired in June, she said. By June 16, she said, the portfolio was in transition to Bank One. Cardholders were promptly notified.

Sony would not say why it switched issuers, but in an earnings statement for its first quarter, which ended June 30, it posted a $64 million advance payment for licensing rights on Sony-branded credit cards. …

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