They were just two press releases, but they spoke volumes about the brands of two banks on both sides of the border: BMO Bank of Montreal, Canada’s fourth largest bank, reported earnings of $647 million Canadian ($1.11 per share), Tuesday morning, beating the Street’s expectations.
Just a couple of hours earlier, BMO announced it had purchased the North American Diners Club business from Citigroup for a purchase price so “insignificant” that it was not disclosed.
But it was meaningful enough to BMO: the deal more than doubles its corporate credit card business, adding $7.8 billion in US dollars in annual transactions, and net receivables of nearly $1 billion. Diners Club carries also a certain amount of cachet, since it was the first charge card to hit the US market in 1950.
The Diners Club deal, however, is a microcosm of the banking situation on both sides of the 49th parallel.
Wounded giant Citigroup, survivor of a brutal financial crisis that put 110 US banks out of business, is shedding non-core assets at an alarming pace. Last week, it sold its controlling stake in Japan’s leading call center operator, Bellsystem24, for $1 billion. It has also received a pair of bailouts from the federal government, totaling $45 billion, making it the poster child for public outrage at Wall Street. (All figures in US dollars.)
Citigroup's brand is in freefall. Its executive team is hoping to right the ship by focusing on its core banking business before it, too, becomes a casualty of the recession.
BMO, meanwhile, is based in Canada, home to a banking system with zero failures since the onset of the recession and the envy of the entire financial world. Now that it has exclusive rights to issue Diners Club cards to corporate and professional customers in the U.S. and Canada and a chest full of cash, the BMO brand is clearly in the money.