OneMain Financial Holdings Inc. of Baltimore provides personal loans and has more than 1,100 neighbourhood branches across 43 states. The Citigroup subsidiary, originally founded as Commercial Credit, has about 5,600 employees. It has acquired companies such as The Associates and Washington Mutual Finance over the years.
"While this business didn't fit our strategy, it serves customers who deserve and need credit," Citi CEO Michael Corbat said in a printed statement.
Citi said that it will use part of the proceeds from the sale to retire certain funding that currently supports Citi Holdings. The sale, along with retirement of the related funding, are expected to result in a net addition to earnings before income taxes of approximately $1 billion.
Springleaf Holdings Inc. of Evansville, Indiana will consolidate approximately 200 branches beginning in the middle of next year. The combined company is expected to have 1,967 branches across 43 states. The Springleaf brand will begin to be phased out in 2016 and use the name OneMain.
Springleaf CEO Jay Levine will lead the combined company.
The boards at Springleaf and Citigroup have approved the deal, which is expected to close in the third quarter.
Once the transaction is complete, the combined company will be run from Springleaf's executive office in Connecticut. It will maintain a significant presence in Evansville and Baltimore and run key operations out of Wilmington, Delaware; Chicago; London, Kentucky; Mendota Heights, Minnesota; Tempe, Arizona; Fort Mill, South Carolina; and Irving and Fort Worth, Texas.
Shares of Citigroup Inc. rose 56 cents to $54.05 in premarket trading Tuesday.