Home News Citi to Sell Southeast Asia Retail Business to Singapore’s UOB for $3.7 Bln

Citi to Sell Southeast Asia Retail Business to Singapore’s UOB for $3.7 Bln

Citi to Sell Southeast Asia Retail Business to Singapore’s UOB for $3.7 Bln

Citigroup has agreed to sell its consumer business in four Southeast Asian markets to United Overseas Bank for about S$5 billion ($3.7 billion), bringing the U.S. bank closer to its goal of exiting retail operations in 13 markets.

The proposed acquisition by Singapore’s UOB will be its biggest in two decades and double its retail customer base in the four markets in Southeast Asia, where the bank already has a substantial presence and competes with larger rivals including DBS Group (DBSM.SI) and OCBC.

“From the integration standpoint, acquiring from a single, reputable seller with a uniform franchise will reduce complexity. One bank, one platform, one model,” Wee Ee Cheong, UOB’s deputy chairman and chief executive, told reporters and analysts at a briefing on Friday.

UOB, Southeast Asia’s third-largest bank, is acquiring Citi’s unsecured and secured lending portfolios, wealth management, and retail deposit businesses in the four countries. This includes 24 branches.

Citi’s consumer business in the markets employs about 5,000 employees, who will be transferred to UOB.

Kevin Kwek, a senior analyst at Sanford C. Bernstein, said the deal will help UOB to “play a bit of catch-up on a scale”.

“It’s good in that it is small and affordable, and at 1.2 times book, not too bad for Citi’s assets which are known to be high quality.”

UOB shares rose 2.7% to a four-year high.

Citi’s exit from Southeast Asia comes after CEO Jane Fraser said last year the bank would close retail operations in 13 markets, including 10 in Asia, to refocus on its more lucrative institutional and wealth management businesses. read more

“Focusing our business through these actions will facilitate additional investment in our strategic focus areas, including our institutional network across the Asia Pacific, driving optimal returns for Citi,” Peter Babej, Citi’s Asia Pacific CEO, said in a statement.

Last year, Citi agreed to sell its Philippines’ consumer banking franchise, wound down its South Korean consumer bank, and sold its Australian consumer banking business.

Citigroup had also announced plans to exit retail operations in India, Taiwan, and China.

DEAL DETAILS

UOB is financing the deal through its excess capital and said it remains comfortable maintaining its dividend policy of a 50% payout ratio.

The purchase price includes a net asset value of about S$4 billion of the businesses being sold and a premium of S$915 million paid by UOB.

Excluding one-off transaction costs, UOB expects the deal to immediately boost the group’s earnings per share and return on equity.

UOB said Citigroup’s consumer business in the four markets had a customer base of 2.4 million as of June 30, 2021, and the operations generated an income of S$500 million in the first half of 2021.

The acquisition will propel UOB to among the top 10 retail bank rankings in Indonesia, Southeast Asia’s biggest economy, and place it among the top five retail banks in Malaysia.

Subject to regulatory approvals, UOB is targeting completing the deal in phases until the first quarter of 2024.

Credit Suisse (Singapore) is the financial adviser to UOB on the latest deal, while Allen & Overy LLP (Singapore) is the legal adviser.

Fiscal Stimulus Bolsters US Economic Growth in Q1, Fastest GDP Growth Since 2003

The second-fastest gross domestic product growth since the third quarter of 2003, reported by the Commerce Department on Thursday, left output just 0.9% shy of its level at the end of 2019.

US Economy Grew Robustly in First Quarter

GDP grew at a 6.4% annual rate in the quarter, leaving the economy within 1% of its peak.

Asia-Pacific Markets Broadly Lower As Investors Turn Cautious

Asia-Pacific markets struggled for gains Friday as investors turned cautious, despite a positive finish stateside in the previous session.

World Shares Near Record High on Strong US Economic Data and Earnings

US economic growth accelerated in the first quarter, fuelled by massive government aid.

How the US Won the Economic Recovery

I looked for a country that got the economic response to Covid-19 right. I found the US.

Barclays Boss Predicts Biggest Economic Boom Since 1948

The UK is about to experience its biggest economic boom since the aftermath of World War Two, according to Barclays boss Jes Staley. His upbeat...

Buying American Is Easier Said Than Done: Will Biden’s Plan Juice the US Economy?

Joe Biden and Donald Trump don't agree on much, but this much they do: We should buy American products. But that's easier said than done.

Silver Down As Dollar and Yields on Bonds Rose as US Economy Advanced

Benchmark U.S. 10-year Treasury yields hovered near a more than two-week high, increasing the opportunity cost of holding non-yielding bullion.

Yellen Doesn’t See Biden Plan Creating Inflation ‘Issue’

President Joe Biden’s economic plan is unlikely to create inflation pressure in the U.S. because the boost to demand will be spread over a decade, said Treasury Secretary Janet Yellen.

Inflationary Pressure, Hawkish Fed Official Remarks Keep US Stocks on Leash

Dow added 2.4%, the S&P 500 gained 5.6%, and the Nasdaq jumped 7%. Dow was down 0.54% at 33,875 while the S&P was down by 0.72%. Nasdaq was down by 0.85%.