Citigroup announced today it will buy Principal Financial Group’s mortgage business for approximately $1.3 billion.

The acquisition of Des Moines, Iowa-based Principal Residential Mortgage includes about $6.9 billion in assets and $137 million of franchise premium. The deal, expected to close prior to the end of the year, is expected to add to Citigroup’s earnings this year.

“The acquisition of PRMI strengthens CMI’s position as a leading servicer and provider of residential mortgages and supports our stated objective to grow our servicing portfolio and customer base,” Carl Levinson, chairman of CitiMortgage, said in a statement.

Citigroup has about 200 million customer accounts and does business in more than 100 countries. Major brand names under Citigroup’s umbrella include Citibank, CitiFinancial, Primerica, Smith Barney, Banamex and Travelers Life and Annuity.

Last year, CitiMortgage ranked as the eighth-largest residential mortgage funder, with about $108.4 billion in volume.

The sale will allow Principal Financial Group to focus on its core retirement products and services, annuities, mutual funds and life/health insurance.

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