The two companies announced Wednesday that Citi would sell its prepaid card services division for undisclosed terms to the Bavaria, Germany-based company.
"This acquisition extends Wirecard AG's global presence into the North American market," Wirecard CEO Markus Braun said in a press release. "On an operating level we look forward to sustainably enriching their existing product portfolio via our innovative issuing solutions"
Meanwhile, a spokesperson for Citigroup reached by phone said the financial terms of the deal are not material to Citi.
"It's not something Citi sees as having meaningful scale," analyst Jeff Harte of Sandler, O'Neill & Partners said in an interview.
As a part of the deal, Wirecard will retain over 100 Citigroup's prepaid card employees, which primarily operate out of Conshohocken, Pa.
According to Wirecard's press release on the deal, the division has launched services for over 2,500 clients in the past. Clients serviced include telecommunication service providers, health sciences companies, IT and electronics manufactures, internet and consumer goods companies and public sector clients. The portfolio is made up of incentive and compensation cards.
"Others have made some similar moves with prepaid cards stuff," Harte said. "I don't know if it's a big enough business to move the needle."
According to Harte, the deal makes sense from a strategic standpoint for Citigroup.
"As I think about a prepaid card, I don't think that so much fits in with the direction they're taking," Harte said, noting that Citigroup has indicated that it plans to focus more on urban, affluent customers in the near term.
Harte added that Citigroup will likely divest more of its smaller divisions that don't fit in with the strategy in the near term. He said the company also won't likely do much acquiring within the next year or so, but instead will focus on organic growth.
Citigroup, which has a market cap of $122.93 billion, was trading at $41.88 per share Wednesday, up 3.5% from market open.
Wirecare could not be reached for comment.
Citigroup declined further comment on the deal.