By P.R. Venkat
Citigroup Inc. is selling its retail banking business in the Philippines with assets worth nearly $1.8 billion to a national bank as part of an exit strategy from retail banking in Asia.
Union Bank of the Philippines will also get Citi’s credit cards, personal loans, wealth management and retail deposit business as part of the deal, the local bank said Thursday.
In a separate statement, Citigroup said Union Bank would pay a premium of about $908 million in cash for the net assets of the acquired business.
The acquisition will be financed through a combination of equity offerings and the use of internal resources. Union Bank is launching a 40 billion Philippine peso ($796.9 million) rights offering, to which its major shareholders, including Aboitiz Equity Ventures and Insular Life Assurance, have agreed to subscribe.
At the end of June, Citi’s consumer banking business in the Philippines had total assets of PHP 89.5 billion, including gross loans of PHP 59.7 billion. Its total liabilities were PHP 71.7 billion, including deposits of PHP 67.8 billion, Union Bank said.
Citi’s customer base numbered nearly one million during the period.
The transaction with Citi is expected to close in the second half of 2022.
In April this year, the US bank announced it would exit its consumer franchises in 13 overseas markets, including 10 in Asia, including mainland China – where the bank has had branches since 2007 – India, Korea South and Australia.
The decision to exit these markets is part of Citi’s decision to expand its private banking and wealth management businesses. Since the beginning of the year, the bank has hired several hundred employees for its heritage business in Asia.
“We are executing on our renewed strategy, focusing resources in areas where our global network positions us to deliver optimal growth and returns,” said Peter Babej, Managing Director of Citi Asia Pacific.
Write to PR Vena at [email protected]