Citi to hive off OneMain to Springleaf for $4.25 bn



Citi to hive off OneMain to Springleaf for $4.25 bn

NEW YORK - Citigroup Inc has entered into an agreement to sell its subsidiary OneMain Financial Holdings Inc for $4.25 billion in cash to personal finance company Springleaf Holdings Inc, creating the largest subprime lender in the United States.

The combined company is expected to earn $800-$900 million in 2017, Springleaf CEO Jay Levine said on a call post the announcement.

Springleaf, majority owned by Fortress Investment Group LLC, specialises in offering loans to so-called subprime borrowers with less than stellar credit ratings.

Plans of hive off OneMain, which focuses on middle-level customers, had been in the works for the last four years as Citigroup sought to sell unwanted assets and focus on wealthier clients.

The third largest US bank had tried to spin-off OneMain through an initial public offering (IPO) also but dropped plans as it did not get the desired price.

Originally founded as Commercial Credit during the financial crisis to park assets that Citigroup wanted to divest or wind down, OneMain has over the years expanded operations through acquisition of companies like The Associates and Washington Mutual Finance.

In 2014, Citigroup had reduced Citi Holdings' assets to 5 percent of total assets from more than 30 percent.

"While this business didn't fit our strategy, it serves customers who deserve and need credit," Citi CEO Michael Corbat said in a statement Tuesday..

Citi plans to use part of the proceeds from the sale to retire certain funding that currently supports Citi Holdings. The sale, along with retirement of the related funding, are expected to result in a net addition to earnings before income taxes of approximately $1 billion.

Springleaf Holdings Inc. of Evansville, Indiana will consolidate approximately 200 branches beginning in the middle of next year. The combined company is expected to.

The deal will create a lender with $15 billion in assets and 1,967 branches across 43 states. The Springleaf brand will begin to be phased out in 2016, as OneMain consolidates operations beginning from middle of next year.

Springleaf shares soared 38 percent to a record $52.44 on Tuesday. Citigroup's shares were marginally higher at $53.73.

OneMain, which has about 5,600 employees, provides loans to buy small-ticket items. It has been profitable since 2010, when it posted a $2 billion loss. In the nine months ended September, OneMain posted $415 million profit, a rise of 7 percent.

Post the completion of the transaction, Evansville, Ind.-based Springleaf plans to run the combined company from its executive office in Connecticut, while retaining a large presence in Baltimore, the headquarters of OneMain.

"Baltimore will remain a significant corporate center for the combined company," said Citigroup spokesman Mark Costiglio, adding that substantially all of its roughly 550 Baltimore-based employees are expected to stay in the city.

Citi to hive off OneMain to Springleaf for $4.25 bn

Citi to hive off OneMain to Springleaf for $4.25 bn

Big News Network.com
4th March 2015, 15:31 GMT+11

NEW YORK - Citigroup Inc has entered into an agreement to sell its subsidiary OneMain Financial Holdings Inc for $4.25 billion in cash to personal finance company Springleaf Holdings Inc, creating the largest subprime lender in the United States.

The combined company is expected to earn $800-$900 million in 2017, Springleaf CEO Jay Levine said on a call post the announcement.

Springleaf, majority owned by Fortress Investment Group LLC, specialises in offering loans to so-called subprime borrowers with less than stellar credit ratings.

Plans of hive off OneMain, which focuses on middle-level customers, had been in the works for the last four years as Citigroup sought to sell unwanted assets and focus on wealthier clients.

The third largest US bank had tried to spin-off OneMain through an initial public offering (IPO) also but dropped plans as it did not get the desired price.

Originally founded as Commercial Credit during the financial crisis to park assets that Citigroup wanted to divest or wind down, OneMain has over the years expanded operations through acquisition of companies like The Associates and Washington Mutual Finance.

In 2014, Citigroup had reduced Citi Holdings' assets to 5 percent of total assets from more than 30 percent.

"While this business didn't fit our strategy, it serves customers who deserve and need credit," Citi CEO Michael Corbat said in a statement Tuesday..

Citi plans to use part of the proceeds from the sale to retire certain funding that currently supports Citi Holdings. The sale, along with retirement of the related funding, are expected to result in a net addition to earnings before income taxes of approximately $1 billion.

Springleaf Holdings Inc. of Evansville, Indiana will consolidate approximately 200 branches beginning in the middle of next year. The combined company is expected to.

The deal will create a lender with $15 billion in assets and 1,967 branches across 43 states. The Springleaf brand will begin to be phased out in 2016, as OneMain consolidates operations beginning from middle of next year.

Springleaf shares soared 38 percent to a record $52.44 on Tuesday. Citigroup's shares were marginally higher at $53.73.

OneMain, which has about 5,600 employees, provides loans to buy small-ticket items. It has been profitable since 2010, when it posted a $2 billion loss. In the nine months ended September, OneMain posted $415 million profit, a rise of 7 percent.

Post the completion of the transaction, Evansville, Ind.-based Springleaf plans to run the combined company from its executive office in Connecticut, while retaining a large presence in Baltimore, the headquarters of OneMain.

"Baltimore will remain a significant corporate center for the combined company," said Citigroup spokesman Mark Costiglio, adding that substantially all of its roughly 550 Baltimore-based employees are expected to stay in the city.