Provencred has a strong presence in the country's provinces and was acquired by Citigroup in 1999 through Citibank Overseas Investment Corporation.
The consumer finance unit has been operating for over 35 years in Argentina and specializes in consumer loans and credit cards. Its business portfolio totals some US$50mn, according to sources.
"With the sale of Provencred, Citi leaves a non-strategic business to refocus on increasing its resources to continue expanding its traditional consumer and corporate banking business," Citibank Argentina chairman Juan Bruchou said in the release.
Banco Comafi had 3.04bn pesos (US$880mn) in assets and 233mn pesos in equity at end-September 2008.
The bank operates through 55 branches countrywide with a strong presence in the greater Buenos Aires area.
Banco Comafi carried out the purchase through parent company Pvcred, which also includes leasing company The Capita Corporation, internet-based consumer lender Crediclick and brokerage house Comafi Bursátil, among others.
Adding Provencred represents an important opportunity for Comafi to expand into the country's provinces, Pvcred chairman Eduardo Arrobas said in the press release.
Comafi controller Guillermo Cerviño late last year increased his ownership in the bank to 88.5%.
Last month, Citi announced it was splitting into two operating units, Citicorp and Citi Holdings. The former will hold the bank's core businesses, which includes Citi's consumer and commercial banking franchises in Latin America.
M&A WAVE AHEAD?
The sale announcement may mark the first of more deals to come in the Argentine consumer finance business over coming weeks, according to sources.
Banco Supervielle and Comafi had been carrying out their respective due diligence processes to buy GE Money Argentina, the local financial arm of General Electric (NYSE: GE).
So the purchase of Provencred by Comafi would clear the way for Supervielle to acquire the GE unit, sources say.
GE Money Argentina began operating in Argentina in 1999 and has 44 branches and issues MasterCard (NYSE: MA) credit cards. Its assets and consumer loan portfolio amounted to 666mn pesos and 296mn pesos respectively as of end-November.
CFA had 1.67bn pesos in assets as of end-November, half of which were consumer loans. The company operates through 60 branches countrywide, 33 of them in Buenos Aires.
CFA issues both MasterCard and Visa (NYSE: V) credit cards.