A pedestrian walks in front of Citibank's office in the financial district of Makati suburban Manila ... [+]
UnionBank of the Philippines—which counts the Aboitiz family, one of the country’s richest clans, as its biggest shareholder—has agreed to acquire Citigroup’s consumer banking business in the Southeast Asia nation for a cash consideration plus premium of 45.3 billion pesos ($904 million).
“This acquisition further cements our position as a leading bank in the Philippines, as well as fast tracks our growth aspiration in the retail banking segment,” Erramon Isidro M. Aboitiz, chairman of UnionBank, said in a statement to the Philippine Stock Exchange. The transaction is expected to be completed in the second half of 2022, subject to regulatory approvals.
The deal includes Citigroup’s consumer banking operations in the Philippines comprising credit cards, personal loans, wealth management and the retail deposit business. It also includes real estate assets such as the Citibank Square in Eastwood City in Quezon City and the bank’s three full service branches and five wealth management centers.
“We are delivering on our renewed strategy, focusing resources in areas where our global network positions us to deliver optimal growth and returns,” Peter Babej, Citibank’s Asia Pacific CEO, said in a separate statement.
Citigroup has said it plans to exit its consumer banking franchises across 13 markets in Asia, Europe, the Middle East and Africa. The divestments are expected to release approximately $7 billion of allocated tangible common equity over time.
The group’s Philippine consumer banking business—which employs about 1,750 people—had total assets of 89.5 billion pesos, including gross loans of 59.7 billion pesos and deposits of 67.8 billion pesos as of June 30, 2021, according to UnionBank. It also had assets under management of 95 billion pesos and a customer base of about one million.
“We look forward to this game-changing opportunity to leapfrog our credit card business and significantly expand our banking business in the higher end segment of the consumer market,” Edwin Bautista, CEO of UnionBank, said in a statement. “There are clear synergistic opportunities in this engagement.”
UnionBank said it plans to raise up to 40 billion pesos in fresh capital through the sale of additional shares to existing shareholders via a stock rights offering. Shareholders including Aboitiz Equity Ventures, The Insular Life Assurance Co. and Philippine pension fund Social Security System are committed to fully subscribe to the offering, the bank added.
