Citigroup sells its Southeast Asia retail business for $3.7bn

March 2022 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

March 2022 Issue

As part of its goal to exit retail markets in 13 jurisdictions, US multinational investment bank Citigroup is to sell its consumer banking franchises in Indonesia, Malaysia, Thailand and Vietnam to Singaporean multinational banking organisation UOB Group (UOB) in a deal valued at $3.7bn.

The transaction includes all Citigroup’s retail banking and credit card businesses but excludes the bank’s institutional businesses in all four countries. Moreover, the agreement covers all related Citigroup staff, with approximately 5000 consumer bank and supporting employees expected to transfer to UOB upon close of the proposed deal.

Upon closing, Citigroup expects the transaction to result in the release of approximately $1.2bn of allocated tangible common equity, as well as an increase to tangible common equity of over $200m.

“The sale of these four consumer markets, along with our previously announced transactions, demonstrate our sense of urgency to execute our strategic refresh,” said Mark Mason, chief financial officer at Citigroup. “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.”

With approximately 200 million customer accounts and business relationships in more than 160 countries and jurisdictions, Citigroup provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management.

“The acquisition of Citigroup’s retail business in our key markets of Indonesia, Malaysia, Thailand and Vietnam is a great opportunity that comes at the right time,” said Wee Ee Cheong, deputy chair and chief executive of UOB. “UOB believes in Southeast Asia’s long-term potential, and we have been disciplined, selective and patient in seeking the right opportunities to grow.”

Since its incorporation in 1935, UOB has grown organically through a series of strategic acquisitions. Now rated among the world’s top banks, it has a global network of more than 500 offices in 19 countries and territories in Asia Pacific, Europe and North America.

“We are excited to announce this transaction with UOB, a leading pan-Asian institution,” said Peter Babej, chief executive of Citi Asia Pacific. “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.”

The transaction is estimated to be completed between mid-2022 and early 2024, depending on the progress and outcome of the regulatory approval process. The 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.

Acting as Citigroup’s exclusive financial adviser is its own banking, capital markets and advisory division. Credit Suisse (Singapore) Limited is acting as financial adviser to UOB Group with Allen & Overy LLP (Singapore) as legal advisers.

Mr Cheong concluded: “The acquired business, together with UOB’s regional consumer franchise, will form a powerful combination that will scale up UOB Group’s business and advance our position as a leading regional bank.”

Fraser Tennant