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Citigroup: Hasta la Visa?
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February 10, 1999: 7:47 a.m. ET
Two Citigroup execs resign from Visa boards, may go to MasterCard
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NEW YORK (CNNfn) - Citigroup may be on the verge of swapping credit card affiliations.
Two top Citigroup Inc. executives - co-CEO John Reed and co-head of the bank's consumer business Robert Lipp - resigned from the boards of Visa International and its Visa USA unit Friday.
The move, revealed in press reports Wednesday, that could signal the end of an affiliation between the largest credit card brand and one of the top credit card issuers.
The motive for the departures, according to published reports, is Citigroup's desire to promote the Citibank brand name in its credit card business rather than continue to have it subsumed under the Visa name, and as a result, reports say, it will be turning over the bulk of its credit card business to Visa's smaller rival, Mastercard.
A spokesman for Visa, which is an association owned and governed by its member banks, confirmed the two Citigroup (C) executives had resigned their board seats last Friday, but said the group had not been notified of any plans by Citigroup to end the relationship.
Reed said during Citigroup's fourth quarter conference call recently that he "is the premier advocate" of allowing issuing banks to promote their own Citibank brand on credit cards.
Credit card executives quoted by the Wall Street Journal indicated a move to Mastercard would serve two key purposes. First, Citigroup will lower its dues. Citigroup pays Visa between $100 to$200 million annually, or roughly 20 percent of all yearly bank dues, and it has felt it is not getting its money's worth since it helps finance advertising for the Visa brand and inadvertently aids smaller banks that belong to Visa to compete with Citigroup. And secondly, the bank reportedly will be able to put its own Citibank brand on the front of cards, while the Mastercard logo will appear on the back.
A Mastercard spokesman was not available for comment.
A Visa spokesman said his company maintains its goal to promote both brands in a complementary way.
"We have strong support among our board that the Visa brand should be managed in a way that ensures its long term vibrancy even as some member banks seek to build their own brand identity," said Albert Coscia, Visa's vice president for corporate relations.
Coscia could not say how many credit cards issued by Citigroup carry the Visa brand.
Visa has more than half of the global credit card market, with Mastercard a distant second at about 25 percent. American Express and Discover come in a distant third and fourth.
Citigroup and Bank One Corp. (ONE) lead the way in issuing credit cards in the United States. 
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