Justice Department Requires Springleaf to Divest 127 Branches in 11 States in Order to Complete Acquisition of OneMain Financial
November 13, 2015 - The Department of Justice announced today that it will require Springleaf Holdings, Inc. (Springleaf) to divest 127 branches with over $600 million in loan receivables in order for Springleaf to proceed with its proposed $4.25 billion acquisition of OneMain Financial Holdings, LLC (OneMain) from CitiFinancial Credit Company, a wholly owned subsidiary of Citigroup, Inc.
The Antitrust Division, along with the offices of seven state attorneys general, filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the proposed transaction. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit. The participating state attorneys general offices represent Colorado, Idaho, Pennsylvania, Texas, Virginia, Washington and West Virginia.
“Personal installment loans are often a critical lifeline for borrowers with limited credit options, allowing them to pay for unexpected expenses or to consolidate debts,” said Assistant Attorney General Bill Baer, of the Justice Department’s Antitrust Division. “Today’s proposed settlement will ensure that subprime borrowers in over 100 local markets across the United States continue to enjoy the benefits of competition when they seek these important loan products.”
Without the divestiture, subprime borrowers seeking personal installment loans would face fewer choices for these important loan products in local markets located in Arizona, California, Colorado, Idaho, North Carolina, Ohio, Pennsylvania, Texas, Virginia, Washington and West Virginia.
Personal installment loans to subprime borrowers are fixed-rate, fixed-term and fully amortized loan products that are marketed to consumers who have limited access to credit from traditional banking institutions. According to the complaint, Springleaf and OneMain are the two largest providers of personal installment loans to subprime borrowers in the United States. Springleaf and OneMain specialize in the same products (large installment loans typically ranging from $3,000 to $6,000), target the same customer base, and have a large degree of geographic overlap between their branch networks.
Specifically, the complaint alleges that in local markets within and around 126 towns and municipalities in eleven states, Springleaf and OneMain operate branches in close proximity to one another – often within five miles – and face few, if any, other competitors. According to the complaint, the loss of head-to-head competition between Springleaf and OneMain would result in a reduction of consumer choice that likely would drive subprime borrowers to much more expensive forms of credit or leave them with no reasonable alternative.
Under the terms of the proposed consent decree, Springleaf must divest 127 branches in eleven states to Lendmark Financial Services or to an alternative buyer approved by the United States. The divestiture includes all active loans originated or serviced at the divested branches and other assets associated with the branches. Divestiture of the branches to Lendmark will create a new competitor in the provision of personal installment loans to subprime borrowers in Arizona, California, Colorado, Idaho, Ohio, Texas, and Washington. In North Carolina, Pennsylvania, Virginia, and West Virginia, the divestiture will establish Lendmark as a new competitor in some local areas and enhance its competitive presence in others. Taken together, the divestitures will remedy the loss of competition alleged in the department’s complaint.
Springleaf is a Delaware corporation with its headquarters in Evansville, Indiana. Springleaf operates approximately 830 branches in 27 states. Springleaf has a consumer loan portfolio that totals $4 billion.
OneMain is a Delaware limited liability company with its headquarters in Baltimore. OneMain operates approximately 1,139 branches in 43 states. OneMain is a subsidiary of CitiFinancial Credit Company, a holding company that is a wholly-owned subsidiary of Citigroup. OneMain has a consumer loan portfolio that totals $8.4 billion.
As required by the Tunney Act, the proposed consent decree, along with the department’s competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.
Springleaf Complaint (596.89 KB)
Springleaf APSO (352.74 KB)
Springleaf CIS (634.75 KB)
Springleaf PFJ (735.57 KB)
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