Citibank has entered into a ten year profit-sharing joint venture (JV) with Virgin Money group (VMG) to offer new credit cards, retail deposit accounts and mortgages – reported TheAustralian. According to the agreement, Citibank will provide funding, infrastructure and banking networks for the new JV.
It has been reported that the first credit card is slated for July 2010 and then online retail savings and deposit accounts will be followed. The accounts will be offered only online or through Citibank’s existing call centres, with no branch access. Further, the JV is also expected to develop a Virgin Blue credit card linked to the budget airline with reward points.
According to the newspaper, Citibank defeated National Australia Bank (NAB) to bag the deal with VMG. Besides NAB, Commonwealth Bank and Westpac are the other major banks in Australia. Roy Gori, CEO of Citibank, said: “We want to break into the top four and take a market share of 13-14%, and the trajectory of the business is in line with that.”
“I would argue that this is the best time to look at launching a product like this. There is demand for an alternative because there has been so much consolidation. There has been so much market share taken by the Big Four. We think the marketplace and consumers are screaming for an alternative. I think this is the best time,” he added.
Reportedly, five years ago, VMG emerged as a major player in Australia through its agreement with Westpac for a low-cost credit cards, however, Westpac inherited most of the customers when the contract ended a year ago.
