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November 25, 2009

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Citigroup no longer a member of the Diners Club

CITIGROUP Inc is selling its Diners Club North American franchise to BMO Financial Group as it continues to shed non-core assets and streamline operations.

Financial terms of the deal were not disclosed yesterday.

The sale of the North American operations comes more than a year after Citigroup sold the international portion of the Diners Club operations to Discover Financial Services. The international business was sold to Discover in April 2008 for US$165 million.

New York-based Citi, among the banks hardest hit by the credit crisis last year, has been selling off divisions that are no longer considered part of its primary consumer and institutional banking operations.

Last week, Citi agreed to sell its controlling stake in Japan's leading call center operator, Bellsystem24, for US$1 billion.

Citi twice received bailouts from the government, totaling US$45 billion, as losses mounted on soured investments and failing customer loans. A portion of that government investment was converted to a 34 percent stake in the bank.

Citigroup said the sales will likely lower its assets in Citi Holdings, the division holding non-core assets, by about US$1 billion, but should not have a material impact on its net income or capital ratios.

The acquisition gives Toronto-based BMO, the parent of Bank of Montreal, exclusive rights to issue Diners Club cards to corporate and professional clients in the United States and Canada. It includes the Club Rewards program and the Diners Club professional card.

BMO, which owns Chicago-based Harris Bank, said the deal will add US$7.8 billion in card transactions and give it net receivables of nearly US$1 billion, making it more competitive in the North American commercial card market.

The acquisition is expected to close before March 31, 2010.


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