In a move that directly aims at the four major banks in Australia, Citibank (NYSE:C) has signed a deal with Richard Branson’s Virgin Money to offer products and services of new credit cards, mortgages and retail deposit accounts.
Virgin Money was a force in Australia in their partnership with Westpac, which yielded over 750,000 new credit card accounts over the duration of the deal, until their contract expired about a year ago.
Another major player in the Australian market, National Australian Bank Ltd, was also competing for the agreement with Virgin Money. One of the goals of Citibank is to overtake NAB by 2012, with an increase to a 14 percent share of the Australian credit card market. At this time NAB has an 11 percent market share in the credit card market of Australia.
Citibank said its goal over the mid-term is to attract about 500,000 new credit card customers. The first Citibank-Virgin credit card is due for release in July of 2010.
Another part of the partnership as it relates to credit cards will be in connection with Branson’s Virgin Blue, where a credit card will be offered which will be tied in to reward points, which will take on the frequent flyer credit cards associated with Qantas.
Also included in the 10-year deal will be mortgages with the Virgin brand and retail deposit accounts, which are both scheduled to be rolled out after the credit cards.
Citibank will “provide the funding, infrastructure and banking networks” in the deal, according to The Australian newspaper.
Financing for the credit card business will come from the local balance sheet of Citibank, but also has a goal of using their retail deposit base to finance the credit card business over the long term.
