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Mellon sells credit card business to Citibank
Wednesday, March 24, 1999 By Patricia Sabatini, Post-Gazette Staff Writer
Mellon Bank Corp. said yesterday it had struck a deal to sell its credit card business to Citigroup Inc.'s Citibank unit in a deal expected to nudge the New York institution past Chicago's Bank One as the largest credit card issuer in the country.
The transaction, which is set to close by the end of the month, puts the jobs of about 575 Mellon credit card employees in limbo. About 200 of those employees work in Pittsburgh.
Citibank spokeswoman Maria Mendler said the bank planned to make offers to "some" Mellon employees, but said it was too early to be more specific. Besides New York, Citibank has credit card operations in Delaware, South Dakota and several other sites across the country. It has no operations in Pittsburgh.
Mellon said it would try to find jobs for some affected employees elsewhere in the bank.
Mellon put the business on the block in January, along with its mortgage servicing operations and network services unit, which processes automated teller machine and debit card transactions for other institutions.
Mellon said it was exiting the businesses to focus on areas with higher returns and more growth potential. The bank hopes to find buyers for the other two units and complete the sales by the end of the third quarter, spokesman Ron Gruendl said yesterday.
Mellon is selling roughly 800,000 Visa and MasterCard accounts with outstanding balances of $1.9 billion. Terms of the transaction weren't disclosed.
As part of the deal, Citibank will be able to issue credit cards under the Mellon and Dreyfus names. That means Mellon Bank customers will still be able to sign-up for credit card accounts through Mellon offices. Citibank also signed an agreement with the American Dental Association to continue to manage and market an affinity card program for ADA members that Mellon had managed.
Citibank's Mendler said the acquisition would give the bank 70 million credit cards in the United States with outstanding balances of about $71 billion, pushing it slightly ahead of Bank One's First USA subsidiary based on year-end figures.
Mellon's crosstown rival, PNC Bank, sold off a portion of its credit card business last year. A deal to sell the remaining, and largest, chunk of the portfolio to MBNA Corp. is pending.
More banks have been selling off their credit card operations recently, finding they don't aren't big enough to compete in a rapidly consolidating industry.
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