Former subprime home lending giants that have since abandoned the mortgage business are merging through an acquisition.
A news release Tuesday from Springleaf Holdings Inc. indicated that
OneMain Financial will be acquired by Springleaf Financial from a unit of Citigroup Inc.
Evansville, Ind.-based Springleaf will pay $4.25 billion in cash for the national consumer lender, which will expand Springleaf’s 830-branch network by 1,100 to nearly 2,000 branches.
But 200 branches will be consolidated starting in the middle of next year.
The deal, which is expected to close in the third quarter, has been
approved by the boards of directors of both Springleaf and Citi.
Baltimore-based OneMain employs 5,600 people. Its roots date back to 1912, according to the announcement, and it was originally founded as Commercial Credit.
“The company has a long history in the personal finance business and over the years has acquired companies such as The Associates and Washington Mutual Finance,” the announcement said.
While it was still on government life support in 2009, Citi moved OneMain-predacessor CitiFinancial Inc. into Citi Holdings — a separate entity created to house the company’s most toxic assets. It was intended to be sold off, though the last of the high-risk investors had fled by that point.
An estimate from the Center for Public Integrity had CitiFinancial originating at least $26 billion in subprime mortgages from 2005 until 2007.
“OneMain is a great business with talented people, who will now become part of a leading personal finance company,” Citigroup CEO Michael Corbat said in the announcement. “While this business didn’t fit our strategy, it serves customers who deserve and need credit.”
Springleaf was formerly operated as American General Financial Services, a subsidiary of American International Group Inc.
The Center for Public Integrity’s estimate had American General Finance originating at least $22 billion in subprime mortgage lenders from 2005 through 2007.
Fortress Investment Group LLC, which has a big stake in Nationstar Mortgage Holdings, took an 80 percent position in Springleaf during 2010. Springleaf conducted an initial public offering in 2013.
The combined entity will be led by Springleaf Chief Executive Officer Jay Levine, while Mary McDowell will continue as CEO of OneMain.
The remaining long-term brand will be One Main.
Headquarters will be maintained in Connecticut.
