UOB Group (UOB) has agreed to acquire Citi's consumer banking franchises in Malaysia, Indonesia, Thailand and Vietnam. According to Citi, the transaction includes retail banking and credit card businesses but excludes the bank’s institutional businesses in all four countries. 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 also pay Citi cash consideration for the net assets of the acquired businesses, subject to customary closing adjustments, plus a premium of US$690 million.
According to Citi's Asia Pacific CEO, Peter Babej, the bank is confident that with UOB's strong culture and broad regional ambitions, it will provide excellent opportunities and a long-term home for its consumer banking colleagues in Malaysia, Indonesia, Thailand and, Vietnam. By focusing the business through these actions, Babej added that it will facilitate additional investment in Citi's strategic focus areas, which includes its institutional network across the Asia Pacific. This, in turn, is said to drive optimal results for Citi.
MARKETING-INTERACTIVE has reached out to Citi for additional information regarding the acquisition.
Meanwhile, Citi's CFO, Mark Manson said the sales of these four consumer markets, along with its previously announced transactions, demonstrated the bank's sense of urgency to execute its 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," Manson explained.
Upon closing, Citi expects the transaction to result in the release of approximately US$1.2 billion of allocated tangible common equity, as well as an increase to tangible common equity of over US$200 million. As previously announced, Citi’s exit from its consumer franchises in 13 markets across Asia Pacific and EMEA is expected to release approximately US$7 billion of allocated tangible common equity over time, said the bank.
Addressing the business structure, Jane Fraser, Citi's CEO, said at that time, while the 13 markets it is exiting from have excellent businesses, Citigroup does not have the scale it needs to compete. With that, the company believes its capital, investment dollars and other resources are better deployed against higher returning opportunities in wealth management and its institutional businesses in Asia.
Separately last year in October, UOB invested up to SG$500 million in digital innovation initiatives as it seeks to double its retail customers. With the investment, the bank aims to digitally serve more than seven million customers across ASEAN by 2026. As part of its investment, UOB also brought together the innovation of its digital bank, TMRW ,with the scale and product depth of its mobile app, "UOB Mighty" on one platform, UOB TMRW. The UOB TMRW team, which brings together experts from technology, behavioural science, data science and banking, aims to drive an agile culture with new enhancements to the mobile app.
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