14th January 2022 - 3 min read
Citi has agreed to sell its consumer banking business in Malaysia to United Overseas Bank (UOB), along with those in the Indonesia, Thailand, and Vietnam market. Amounting to S$4.9 billion (approximately RM15.2 billion), this acquisition is noted to be the largest deal to have been carried out between two foreign banks in Malaysia in at least the past decade.
The transaction will see UOB acquiring Citi’s secured and unsecured lending portfolios (such as mortgages, personal loans, and credit cards), wealth management, and retail deposit businesses. It excludes Citi’s institutional businesses in all four countries. It is also noted that Citi’s consumer business has an aggregate net asset value of approximately S$4 billion (approximately RM12.5 billion), and a customer base of 2.4 million as of 30 June 2021.
According to Citi, UOB was selected following an extensive and competitive auction process, and the transaction is expected to be completed between mid-2022 and early 2024, depending on how long it takes to obtain regulatory approvals in all the involved countries. Citi also took the opportunity to reassure existing customers that they will not be impacted during the transition period as there will be no change in the services provided to its consumer banking and wealth customers.
The chief executive officer of Citi Asia Pacific, Peter Babej further said that this transaction will help Citi in realigning its business strategy moving forward. “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. 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.
Meanwhile, the deputy chairman and chief executive officer of UOB, Wee Ee Cheong commented that the acquisition is 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,” he said in a statement, adding that the acquired business – along with UOB’s regional consumer franchise – will play a key role in advancing UOB’s position as a leading regional bank.
UOB also said that the acquisition will expand its partner ecosystem, and is expected to double its existing retail customer base in the four markets, accelerating its customer base target by five years ahead of time.
Citi had previously announced its intention to exit retail banking in a total of 13 markets back in April 2021, spread across two regions: Asia, as well as Europe, the Middle East, and Africa (EMEA). This move was initiated as part of an ongoing review of the bank’s strategy to streamline its global businesses and to focus on “higher returning opportunities”. Since then, it has been looking to sell its consumer assets, with interested bidders including UOB, Hong Leong Bank, and Standard Chartered Bank.
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