Citigroup Inc agreed to sell its Canadian subprime lending unit to an investor group led by U.S. private equity firms J.C. Flowers and Värde Partners for an undisclosed amount, as the bank scales back its international consumer banking presence.
CitiFinancial Canada, which charges a higher interest rate than most mainstream lenders in Canada, has drawn criticism from some consumer advocates over its interest rates and fees.
The company offers personal loans that start at 27.99 percent and mortgage refinancing that starts at 10.35 percent, according to the company’s website.
CitiFinancial Canada was not immediately available for comment.
The Globe and Mail reported in September that Ontario Teachers’ Pension Plan was among the bidders for CitiFinancial Canada.
The deal, expected to close in the first half of 2017, will not be material to its earnings, Citi said on Thursday.
Citi’s institutional clients group advised the bank on the deal. National Bank Financial was lead financial adviser to J.C. Flowers and Värde. Barclays Capital also served as financial adviser to the buyers.
Update: With $2.5 billion of assets and over a quarter of a million active customers, CitiFinancial Canada operates 217 branches across Canada. In addition to personal lending and mortgage solutions, the company provides retail financing programs.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of Reuters/Bobby Yip