Magazine article American Banker

Home Equity: Associates' Plans and Citi's Dovetailed in Branch Sale

Magazine article American Banker

Home Equity: Associates' Plans and Citi's Dovetailed in Branch Sale

Article excerpt

Associates First Capital Corp.'s decision to shed 128 U.S. consumer finance branches presented an attractive opportunity to Citigroup's expansion-minded Commercial Credit unit.

Commercial Credit "had already intended to open some new branches de novo this year," a Citigroup spokeswoman said. "When this opportunity came along it was a more cost-efficient way to open new locations."

The sale agreement, announced Monday, gives Baltimore-based Commercial Credit earnings from day one, an instant customer base, and 536 welltrained employees, she said.

The branches are in 30 states, stretching from California to New York. The purchase will bring Commercial Credit's branches to more than 1,100, the Citigroup spokeswoman said.

Associates, the largest consumer finance company in the United States, got the branches it is now selling in its recent purchase of Avco Financial Corp. from Textron Inc. for $3.9 billion.

When that deal closed on Jan. 7, Associates said it would slash 400 jobs from Avco's work force, mostly in its Costa Mesa, Calif. headquarters.

Associates' decision to sell 128 of Avco's 1,265 branches was another part of the integration plan. The selection of those branches was based on factors including performance, the number of branches in each state, and their proximity to each other, a spokesman said.

Commercial Credit is considered a success story in financial services cross-selling, having used the door-to-door agents of another Travelers unit, Primerica Financial Services, to sell its products. …

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