Citigroup wants to sell its consumer banking assets in Southeast Asia to Union Bank, the Philippines, for cash plus a premium of $904 million (45.3 billion) pesos.
The transaction includes the local credit card of the U.S. firm along with unsecured lending, deposits, investment businesses, and Citicorp Financial Services and Insurance Brokerage Philippines Inc. Philippine and Cogroup lenders informed this in separate statements Thursday. Which also said that around 1750 employees are expected to join the new owners.
The deal is expected to be closed by the second half of 2022. After a one-hour trading halt, Union bank’s shares rose by as much as 3% in resumed trading in Manila.
Under CEO Jane Frazer, Citigroup is divesting its consumer banking businesses in specific markets in an exercise to reshape its industry towards the more one-hour profitable businesses like investment banking and focus its wealth franchises in hubs like London, Singapore, Hong Kong, and the UAE. Earlier this month, Bloomberg News had reported that Union Bank was the preferred bidder for the buyout.
According to a statement from Citibank’s Asia Pacific CEO, Peter Babe, the firm is delivering on its renewed strategy of focusing on those areas where its global network positions them to provide optimal returns and growth.
The Philippines asset sale had attracted bids from other institutions, including Metropolitan Bank & Trust Co., Bank of the Philippine Islands, BDO Unibank. Union bank was selected after and competitive and extensive auction process as per Citigroup.
Citigroup is planning to ultimately exit its retail banking operations in Bahrain, Taiwan, Vietnam, China, Indonesia, Russia, Poland, Malaysia, India, and Australia. However, the lender will continue to work with corporations and other private banking clients in these markets.
According to a spokesman, Citigroup is investing further to expand its institutional and wealth business and has already hired an enormous workforce this year.
Union Bank would be floating a rights share offer to raise around 40 billion pesos for the acquisition. It has hired Morgan Stanley as its international financial adviser to work exclusively.
