Citigroup Exits More Asian Consumer-Banking Operations With $3.7 Billion Deal

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Singapore’s UOB to pay $690 million premium for regional businesses

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UOB said the net assets were valued at approximately 4 billion Singapore dollars, equivalent to $3 billion as of June 2021, and that it would acquire approximately 2.4 million customers. The final sale price may vary due to changes in the net assets of the businesses.

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Through this transaction, Citigroup said it will focus on regions including its institutional network in the Asia-Pacific region. In December Citigroup agreed to sell its consumer-banking business in the Philippines to a local lender, and had previously reached a similar deal in Australia. It has opted to shut down its operations in South Korea.

“The sale of these four consumer markets, along with our first announced transaction, demonstrates a sense of urgency to execute our strategic refresh,” said Mark Mason, Citigroup’s head of finance.

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The bank’s Asia-Pacific chief executive, Peter Babbage, said in an internal memo to employees that UOB was chosen because of its strong culture and regional ambitions. According to a memo seen by Businesshala, he said the deal follows “an extensive auction process.”

Citigroup said it expects the deal to issue approximately $1.2 billion of allocated tangible common equity, and increase tangible common equity to more than $200 million.

The third largest US bank by assets, Citigroup has long been the only US company with a massive retail-banking network throughout the Asia-Pacific region, in addition to a full-fledged institutional business that specializes in investment banking and corporate lending. ranging from cash. Management and business finance.

The bank said in April last year that it would exit retail operations in 13 markets, 10 of which are in the Asia-Pacific region, to focus resources on its wealth-management and institutional clients’ businesses. Citigroup said Thursday that it expects these divestitures to issue approximately $7 billion of allocated tangible common equity over time.

In addition, Citigroup is in talks to sell its consumer franchises in six remaining markets: Taiwan, India, mainland China, Poland, Russia and Bahrain.

According to a person familiar with the matter, in all markets where Citigroup is selling retail franchises, it maintains consumer-banking licenses, which are also required to run its local institutional businesses. This means that bidders must have existing licenses to perform these tasks, effectively ruling out new entrants to the market.

Earlier this week, Citigroup said it would exit consumer, small-business and medium-market banking in Mexico.

Citigroup said it expects the latest Southeast Asian disinvestment to be dependent on obtaining regulatory approvals in each country. The bank expects about 5,000 employees to move to UOB, and the deal will close between mid-2022 and early 2024.

Write Dave Sebastian at [email protected] and Jing Yang at [email protected]

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