Netherlands-based international bank ABN Amro has reached an agreement to sell its US-based residential mortgage broker origination platform and servicing business ABN Mortgage Group to US banking giant Citigroup, as part of its strategy of streamlining its activities and aligning them around its mid-market commercial and consumer clients.
According to ABN Amro, Citigroup will purchase approximately $9 billion in net assets, of which approximately $3 billion is ABN Amro Mortgage Group’s mortgage servicing rights associated with its $224 billion mortgage-servicing portfolio.
ABN Amro has decided to sell its mortgage arm in an effort to streamline its operations, and commented that, although the unit has performed well over the last 18 months, its US-wide national mortgage broker network and mortgage-servicing portfolio falls outside of the bank’s core strategy.
Joost Kuiper, responsible for ABN Amro’s business unit North America, commented: For us, the decision to sell was one that was appropriate to make in light of our strategic focus on the mid-market client segment.
Citigroup said that the purchase will add 1.5 million servicing customers to its mortgage business and will allow it to move to fourth place in the global mortgage servicing market.
ABN Amro Mortgage Group, which includes AAMG, InterFirst and Mortgage.com, is a unit of LaSalle Bank Corporation. The group’s corporate parent will remain in the residential mortgage business and will continue to offer consumer mortgages and home equity loans.
The deal is expected to close towards the end of first quarter 2007 and, after accounting for costs related to the transaction, ABN Amro expects to record a small book gain on the transaction.