United Overseas Bank Ltd (UOB) has signed agreements to acquire Citigroup’s consumer banking businesses comprising its unsecured and secured lending portfolios, wealth management and retail deposit businesses in Indonesia, Malaysia, Thailand and Vietnam.
The total cash price for the acquisition, will be calculated based on an aggregate premium equivalent to S$915 million plus the net asset value of the consumer business as at completion.
The acquisition is one of the largest deals between two foreign banks in Malaysia in the past decade.
UOB said the acquisition will be financed through excess capital and estimated to reduce UOB’s CET1 ratio by 70 basis points to 12.8%, based on its capital position as at 30 September 2021, adding that the effect to CET1 ratio is not expected to be material and will be well within regulatory requirements.
UOB estimates that completion will take place between mid-2022 and early 2024, and will be conditional on obtaining regulatory approvals relevant to each country and in Singapore.
UOB deputy chairman and CEO Wee Ee Cheong said the acquisition was a great opportunity that came at the right time. “UOB believes in Southeast Asia’s long-term potential and we have been disciplined, selective and patient in seeking the right opportunities to grow.
“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,” she said.
Meanwhile, Citi Asia Pacific CEO Peter Babej said that Citi was confident that UOB, with its strong culture and broad regional ambitions, will provide excellent opportunities and a long-term home for its 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,” he said.
UOB’s retail strategy includes tapping the rising affluence in Southeast Asia, acquiring and serving customers through its digital banking platform, UOB TMRW, and meeting their financial needs through its omni-channel approach as they move up the wealth continuum.
The acquisition will expand UOB’s partner ecosystem and is expected to double UOB’s existing retail customer base in the four markets, accelerating its customer base target five years ahead of time.
Citigroup’s consumer business employs about 5,000 employees, including senior leadership and various teams with a wealth of experience. Their transfer will deepen UOB Group’s bench strength and unlock business synergies.
Credit Suisse (Singapore) Ltd is acting as financial adviser to UOB Group in this proposed acquisition and Allen & Overy LLP (Singapore) as its legal advisers.