Citi to sell consumer bank in Indonesia, Malaysia, Thailand and Vietnam to UOB Group
As part of what Citi is calling a "strategic refresh" the banking giant will exit the consumer banking market in several countries.
Citi on 13 January announced it had reached an agreement with UOB Group (UOB) on the acquisition of Citi’s consumer banking franchises in Indonesia, Malaysia, Thailand and Vietnam. The transaction includes retail banking and credit card businesses but excludes the bank’s institutional businesses in all four countries. Citi remains committed and focused on serving institutional clients in those countries locally, regionally and globally, the corporation said in a statement.
The agreement covers all related Citi staff, with approximately 5,000 consumer bank and supporting employees expected to transfer to UOB upon close of the proposed transaction. UOB will pay Citi cash consideration for the net assets of the acquired businesses, subject to customary closing adjustments, plus a premium of USD690 million.
Upon closing, Citi expects the transaction to result in the release of approximately USD1.2 billion of allocated tangible common equity, as well as an increase to tangible common equity of over USD200 million.
Citi’s exit from its consumer franchises in 13 markets across Asia Pacific and EMEA is expected to release approximately USD7 billion of allocated tangible common equity over time.
We are excited to announce this transaction with UOB, a leading pan-Asian institution. 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, Malaysia, Thailand and Vietnam. Focusing our business through these actions will facilitate additional investment in our strategic focus areas, including our institutional network across Asia Pacific, driving optimal returns for Citi.
UOB was selected by Citi following an extensive auction process. Completion of the divestitures in each country will not be conditional on the completion of the divestitures in the other countries but will be conditional on obtaining regulatory approvals relevant to each country. It is estimated that completion will take place between mid-2022 and early 2024, depending on the progress and outcome of the regulatory approval process.
The sale of these four consumer markets, along with our previously announced transactions, demonstrate our sense of urgency to execute our strategic refresh. We are committed to working in the best interests of our shareholders by focusing our resources on businesses that can deliver growth, as well as increasing the capital we return to shareholders over time.
Citi’s Banking, Capital Markets and Advisory Group is acting as exclusive financial advisor to Citi in respect of the transaction.
