UOB buys Citi’s retail businesses in 4 SEA markets for US$3.65b

UOB is paying for the net asset value plus a premium of US$690m.

United Overseas Bank (UOB) is acquiring Citi’s consumer banking franchises in Indonesia, Malaysia, Thailand, and Vietnam for approximately US$3.65b (S$4.915b).

UOB is paying Citi a total cash consideration comprising the net asset value of the four franchises—valued at approximately US$2.97b (S$4b)—and a premium of US$690m (S$915m). 

Citi expects the transaction to result in the release of approximately $1.2b of allocated tangible common equity, as well as an increase to tangible common equity of over $200m. 

The transaction includes Citi's retail banking and credit card businesses but excludes their institutional businesses in all four countries. 

In a bourse filing, UOB said that it expects the transaction to be financed through excess capital and estimated to reduce UOB’s CET1 ratio by 70 basis points to 12.8%, based on its capital position as of 30 September 2021.

Completion is estimated to take place between mid-2022 and early 2024, depending on the progress and outcome of the regulatory approval process for each country, according to UOB.

In a separate announcement, Citi said that the agreement covers the approximately 5,000 Citi consumer banks and supporting employees under the four markets. All are expected to transfer to UOB upon close of the proposed transaction.

UOB said that it looks forward to “welcoming Citigroup’s customers and employees, who will be kept updated of the progress of the proposed acquisition in the coming months.”

“We are confident that UOB, with its strong culture and broad regional ambitions, will provide excellent opportunities and a long-term home for our consumer banking colleagues in Indonesia,” said Peter Babej, CEO, Citi Asia Pacific.

The acquisition of Citigroup’s retail business in Indonesia, Malaysia, Thailand, and Vietnam is a great opportunity that comes at the right time, said Wee Ee Chong, deputy chairman and CEO of UOB.  

“Subject to regulatory approval, we look forward to integrating Citigroup’s quality portfolio and welcoming its team, and to creating value for our enlarged base of customers, employees and other stakeholders,” Chong stated in UOB’s bourse filing, adding that the acquired franchises, together with UOB’s regional consumer franchise, will help UOB scale their business and advance the bank’s position in the region.

(US$1 = S$1.35)