Citi is selling its consumer businesses in Asia and EMEA to local and regional competitors.
Global banking giant Citigroup agreed to sell its consumer banking businesses in four Southeast Asian markets to Singapore-headquartered Union Overseas Bank (UOB) in a deal valued at approximately $5 billion Singapore dollars ($3.7 billion).
The agreement, which is due to complete by early 2024 pending regulatory approval, will see Citi divest its consumer banking business in Indonesia, Malaysia, Thailand and Vietnam. The bank also sold its retail banking business in Taiwan to Singapore’s DBS Group Holdings for approximately $2 billion.
UOB, Southeast Asia’s third-largest bank, will acquire Citi’s secured and unsecured lending portfolios, wealth management and retail deposit businesses. In addition, approximately 5,000 Citi employees in the four countries are expected to transfer to UOB. Under the terms of the deal, the bank agreed to pay Citi a premium equivalent to S$915 million ($678 million) plus the net asset value of the consumer business.
UOB will finance the acquisition internally from excess capital, and expects to reduce its common equity Tier 1 ratio to 12.8%. The deal will intensify competition among the large Singapore banks, including UOB rivals DBS and OCBC Bank, and pit them against regional rivals.
Citi will remain in the four markets as part of a blueprint to concentrate on key business segments. “Focusing our business through these actions will facilitate additional investment in our strategic focus areas, including our institutional network across Asia-Pacific,” said Citi Asia Pacific CEO Peter Babej, commenting on the deal.
The latest deal furthers Citi’s stated objective of selling its consumer business in 13 markets across Asia and EMEA that Citi says will release approximately $7 billion of equity. In December, Citi agreed to sell its Philippines consumer banking business to Union Bank of the Philippines. A month later, the bank announced its intention to sell the consumer, small business and middle-market banking operations of Mexico City–based Citibanamex, despite investing heavily in the businesses during its 20-year presence. In 2001, Citi acquired Banamex for $12.5 billion in what was the largest deal ever in Mexico at the time.