Coles and Citi enter 10yr credit card agreement
Wesfarmers has entered into a ten-year agreement with Citi Australia for the distribution of Coles branded credit cards.
Coles has over one million customers across its credit cards, car and home insurance services.
After a migration period from Coles who has being controlling its credit card business since acquiring GE Capital’s 50 per cent share in the business in May 2015, Citi will issue Coles-branded cards, manage operations of the card portfolio and fund the receivables.
As part of the transaction, Citi will acquire the existing Cole credit card receivables and Wesfarmers will receive an ongoing share of risk adjusted revenues. The portfolio had gross receivables of approximately AUD $880 million as at October 2016.
Wesfarmers Managing Director, Richard Goyder, said Coles has grown its credit card portfolio for over 20 years through an ongoing focus on customer value.
“We are pleased to partner with a leading global credit card issuer as we enter the next phase of growth for this business,” Goyder said.
Citi Australia Chief Executive Officer, David Livingstone, said Citi was glad to be partnering with one of Australia’s leading companies.
“Today’s agreement reflects our strategy to grow our credit cards business in Australia,” Mr Livingstone said.
The net proceeds from the transaction will be applied to repay Wesfarmers Group debt. The transaction is not expected to materially affect Coles’ reported earnings for the 2017 financial year. Subject to a number of conditions precedent, including Foreign Investment Review Board approval, the transaction is expected to be completed by February 2017.