(CITIGROUP LOGO)
FOR IMMEDIATE RELEASE
CITIGROUP INC. (NYSE SYMBOL: C)
JUNE 2, 2005
CITIGROUP TO ENTER INTO LONG-TERM RETAIL PARTNER CREDIT CARD AGREEMENT
WITH FEDERATED DEPARTMENT STORES
WILL ALSO ACQUIRE APPROXIMATELY $4.4 BILLION FEDERATED CREDIT CARD
PORTFOLIO, AND APPROXIMATELY $2.2 BILLION MAY PORTFOLIO FOLLOWING
MERGER OF RETAILERS
New York, June 2, 2005 -- Citigroup (NYSE: C) today announced that it has agreed
to enter into a long-term agreement with Federated Department Stores, Inc.
(NYSE: FD) under which the companies will partner to manage Federated's credit
card business, including existing and new accounts.
Under the agreement, Citigroup will acquire Federated's approximately $4.4
billion credit card receivables portfolio in two phases. Citigroup will
initially acquire Federated's receivables under management, which totaled
approximately $3.2 billion at fiscal year end 2004. Additional Federated
receivables, totaling approximately $1.2 billion at fiscal year end 2004, are
expected to be transferred to Citigroup in May 2006 from the current provider.
In addition, Citigroup is expected to acquire the approximately $2.2 billion
credit card receivables portfolio of The May Department Stores Company (NYSE:
MAY) within one year following the successful completion of its merger with
Federated, expected in the third quarter of 2005.
Citigroup will pay a premium of approximately 11.5% to acquire each of the
portfolios. The multi-year agreement also provides Federated the ability to
participate in the ongoing success of the portfolio based on credit sales and
certain other performance metrics of the portfolio after the receivable sale is
completed.
This new relationship builds on Citigroup's proven success in enhancing its
distribution channels by forging alliances with industry-leading partners. The
Federated and May credit card portfolios comprise a total of approximately 17
million active accounts.
The transaction is expected to be accretive to Citigroup earnings in the first
year. It is expected to close in the third quarter, subject to applicable
regulatory approvals.
Marge Magner, Chairman and Chief Executive Officer of Citigroup's Global
Consumer Group, said: "With nearly 140 million accounts worldwide, Citigroup is
a global leader in credit cards. This relationship is part of our continuing
effort to leverage our core strengths in partner alliances in the credit card
market. We look forward to applying our innovative, world-class capabilities to
help assure the ongoing success of the Federated and May retail partner programs
and drive sustainable growth within our business."
"Federated and May credit card customers will be prime beneficiaries of this new
partnership," added Steven J. Freiberg, Chairman and Chief Executive Officer,
Citi Cards NA. "As the global leader in credit cards, Citigroup brings
comprehensive, innovative and proven capabilities in a broad spectrum of the
cards industry and by joining these with the expertise of Federated and May, we
look forward to further enhancing the growth and performance of their credit
card program and increasing its appeal to new and existing customers. Federated
and May are recognized leaders in the department store sector and we look
forward to working with its management to expand the success of their overall
franchise."
"We are excited to be joining forces with a world leader in the credit card
business through this new alliance," said Terry J. Lundgren, Federated's
Chairman, President and Chief Executive Officer. "We are exceptionally proud of
the credit operation at Federated's Financial, Administrative and Credit
Services division, and pleased with the value that has been created in this
business as a result of those efforts. We now look forward to working together
with Citigroup to continue to enhance our relationships with our very best
customers, while also building on our success in the credit business by
capitalizing on Citigroup's great expertise and commitment to the credit
business."
The companies noted that Federated and May credit card customers will continue
to be serviced through Federated's service centers located in Mason, Ohio,
Clearwater, Florida and Tempe, Arizona, and May's service centers in Lorain,
Ohio and Earth City, Missouri.
Federated currently operates more than 450 stores under the names of Macy's and
Bloomingdale's. May currently operates approximately 490 department stores under
the names of Famous-Barr, Filene's, Foley's, Hecht's, Kaufmann's, Lord & Taylor,
L.S. Ayres, Marshall Field's, Meier & Frank, Robinsons-May, Strawbridge's and
The Jones Store. It also operates 241 David's Bridal stores, 450 After Hours
Formalwear stores, and 11 Priscilla of Boston stores. The companies combined
revenues for the year ended January 29, 2005 were approximately $30 billion.
# # #
Citigroup (NYSE: C), the leading global financial services company, has some 200
million customer accounts and does business in more than 100 countries,
providing consumers, corporations, governments and institutions with a broad
range of financial products and services, including consumer banking and credit,
corporate and investment banking, insurance, securities brokerage, and asset
management. Major brand names under Citigroup's trademark red umbrella include
Citibank, CitiFinancial, Primerica, Smith Barney, Banamex, and Travelers Life
and Annuity. Additional information may be found at www.citigroup.com.
Certain statements in this document are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act. These statements are
based on management's current expectations and are subject to uncertainty and
changes in circumstances. Actual results may differ materially from those
included in these statements due to a variety of factors. More information about
these factors is contained in Citigroup's filings with the Securities and
Exchange Commission.
Media: Steve Silverman 212-793-0321
Liz Fogarty 212-559-0486
Investors Relations: Art Tildesley 212-559-2718
Fixed Income Investors: John Randel 212-559-5091