Catella Bank has reached an agreement to sell its card issuing operations in Luxembourg to Advanzia Bank for a total consideration of up to SEK360m ($39.74m).

The terms of the agreement involve a fixed consideration of around SEK120m ($13.24m), along with an earn-out structure of potentially up to SEK240m ($26.49m).

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The fixed consideration will be paid in the first quarter of next year and the additional earn-out before the year end.

Catella Bank decided to divest the operations after performing a strategic review. The move is intended to address inefficient capital-structure and extensive regulatory framework associated with its business.

Catella noted that Advanzia, an online direct bank focussed on credit cards, is an optimal fit for its customers as well as employees.

Catella Group CEO Knut Pedersen said: “Advanzia Bank is a strong and credible actor within the credit card operations and I feel confident our customers will be in good hands.

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“With this transaction Catella takes another important step towards a more efficient capital-structure and less extensive regulatory framework.”

Advanzia Bank CEO Roland Ludwig added: “Acquiring Catella’s credit card portfolio in Luxembourg is a perfect fit for us, as it not only complements our existing business lines, but also enables us to expand our market share.”

Catella estimates that its balance sheet total will drop by approximately SEK350m after the transfer of both assets and liabilities to Advanzia Bank.

The group’s banking operation is expected to close down next year.