DBS to acquire Taiwan Citi franchise at premium of $956m to $1.06b

The move is set to make the bank the largest foreign bank in Taiwan by assets. 

The Development Bank of Singapore (DBS) is set to acquire Citi’s Taiwan-based consumer business for a premium of $956m to $1.06b.

According to a report released by Jefferies Singapore, the move is set to place DBS as the largest foreign bank in Taiwan based on assets. 

A 20% RoE biz, enhancements to the wealth management franchise, and CASA-rich retail deposits will affect DBS as a result of the deal. 

The acquisition will benefit DBS, as the agreement is predicted to spur DBS Taiwan’s growth by at least 10 years, due to synergies from economies of scale and strong CASA to support expansion in institutional and small and medium enterprise banking.  

Citi’s consumer operations were also described by Jefferies as a “highly profitable business with an average of $250m annual net profit per annum and over 20% RoE pre-COVID.”

Adding to the benefits of this deal is the use of internal funds and the immediate accretive to EPS at an estimated 2.2%. An RoE ex. one-off transaction cost of $200m will also be observed. 

With the deal expected to be completed by mid-2023, the Citi franchise has an earnings asset base of $20.3b, made up of $11.3b worth of loans and $9b assets under management. Also making up the franchise are deposits of $15.1b with a CASA ratio of 70%, 45 branches, 500k deposit and wealth customers, and 3,500 employees.