Union bank

Citigroup to sell Philippine consumer assets to Union Bank

Union Bank of the Philippines will buy Citigroup Inc.’s consumer banking assets in the Southeast Asian country for cash consideration plus a premium of 45.3 billion pesos ($904 million).

The deal covers the U.S. company’s local credit card, unsecured lending, deposit and investment businesses as well as Citicorp Financial Services and Insurance Brokerage Philippines Inc., Citigroup and the Philippine lender said in statements Thursday. separated. About 1,750 employees are expected to transfer to the new owner, he said.

The transaction is expected to close in the second half of 2022. Union Bank shares closed down 7.8% on Thursday, the biggest drop since Oct. 15, under plans for a rights offering. purchase of shares to finance the agreement.

Under Chief Executive Jane Fraser, Citigroup is divesting consumer banking businesses in select markets as it seeks to reshape itself around more profitable units like investment banking, while focusing its wealth franchise around hubs in Hong Kong, London, Singapore and the United Arab Emirates. Bloomberg News reported earlier this month that Union Bank was the preferred bidder.

“We are executing our renewed strategy, focusing resources in areas where our global network positions us to deliver optimal growth and returns,” said Peter Babej, CEO of Citibank Asia-Pacific in the release.

The sale of the Philippine assets had attracted offers from other financial institutions, including BDO Unibank, Metropolitan Bank & Trust Co. and Bank of the Philippine Islands, Bloomberg News reported in October.

Union Bank was selected following a thorough and competitive bidding process, Citigroup said.

Citigroup eventually plans to exit its retail banking operations in Australia, Bahrain, China, India, Indonesia, South Korea, Malaysia, Poland, Russia, Taiwan, Thailand and Vietnam, although the lender will continue to serve corporate and private banking clients in the markets otherwise it’s gone.

The New York-based lender, however, is investing more to grow its institutional wealth and business and has hired hundreds this year, a spokesperson said.

Union Bank will raise additional capital of up to 40 billion pesos through a rights offering to help fund the acquisition, he said. Morgan Stanley is Union Bank’s exclusive international financial advisor.