Citi Seen as Big Bank Winner in Kmart-Sears

By Kuykendall, Lavonne | American Banker, November 24, 2004 | Go to article overview

Citi Seen as Big Bank Winner in Kmart-Sears


Kuykendall, Lavonne, American Banker


The proposed merger of Kmart Holding Corp. and Sears, Roebuck and Co. should create a generous bump in card use and acceptance for their credit card issuing partners, analysts said.

But Citigroup Inc. is likely to come out the biggest winner, in part because its cards would be promoted in the most stores, and also because it is advising Kmart.

The $11 billion deal, announced last week, is to close by March 31.

Last year Sears sold Citi its $29 billion credit card portfolio for a 10% premium. Citi operates both a Sears MasterCard and a private-label card.

HSBC North America launched a private-label card for Kmart this month. Capital One Financial Corp. launched a Kmart MasterCard and signed up at least 1.5 million accounts in 2000.

Spokespeople for HSBC and Citigroup said how the merger will affect the cards programs has not been decided. A spokeswoman for Citigroup said its cards executives are meeting with Sears to "fully understand the details of the merger."

A spokeswoman for Capital One did not return phone calls about the status of its Kmart program.

A credit card industry insider said the publicity and enlarged distribution network would probably boost the use of all kinds of cards issued on behalf of both retailers. (He requested anonymity because he works with one of the companies involved.)

A Nov. 19 letter to Sears employees said that Sears cards would continue to work at Sears stores. But it did not say whether the cards would also work at Kmart outlets, or whether the new HSBC-issued Kmart cards would work at Sears.

Either way, the number of stores where Sears cardholders can use their cards will probably increase significantly. Alan J. Lacy, Sears' chairman and chief executive, said in a Nov. …

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