Citi to sell 4 Southeast Asia retail units to Singapore’s UOB for $3.65 billion

A man walks past a UOB bank branch in Singapore November 4, 2020. REUTERS/Edgar su

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  • UOB acquires operations in Indonesia, Malaysia, Thailand and Vietnam
  • Financing the acquisition of a retail business with internal capital
  • Purchase will double UOB’s retail business in four markets
  • Acquisition is affordable for UOB – analyst
  • Citi sale part of strategy to focus on wealth management

SINGAPORE, Jan 14 (Reuters) – Citigroup (CN) has agreed to sell its consumer business in four Southeast Asian markets to United Overseas Bank (UOB) (UOBH.SI) for S$4.915 billion (3 $.65 billion), bringing the U.S. bank closer to its goal of exiting retail operations in 13 markets.

UOB’s proposed acquisition will be its largest in two decades and will double the group’s retail customer base in all four Southeast Asian markets, where the Singaporean bank already has a large presence and competes with rivals such as DBS Group (DBSM.SI) and OCBC. (OCBC.SI).

Kevin Kwek, senior analyst at Sanford C. Bernstein, said the acquisition will help UOB, Southeast Asia’s third-largest bank, “play a bit of catch-up.”

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“It’s good as long as it’s small and affordable, and at 1.2 times the pound, it’s not too bad for Citi’s assets which are known to be high quality.”

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

“Focusing our business on these stocks will facilitate additional investments in our strategic areas, including our institutional network across Asia-Pacific, generating optimal returns for Citi,” Citi CEO Peter Babej said Friday. ‘Asia Pacific.

Last year, Citi agreed to sell its consumer banking franchise in the Philippines, liquidate its South Korean consumer bank and sell its consumer banking business in Australia.

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

“UOB believes in the long-term potential of Southeast Asia and we have been disciplined, selective and patient in finding the right growth opportunities,” said Wee Ee Cheong, Vice President and General Manager of UOB. .

UOB said it would acquire Citi’s unsecured and secured loan portfolios, wealth management and retail deposit businesses in all four countries. This includes 24 branches.

Citi’s consumer markets business employs approximately 5,000 employees, who will transfer to UOB.

UOB shares rose 1.7% to a four-year high.

The bank is funding the deal with its excess capital and said it remains comfortable maintaining its dividend policy of a 50% payout ratio.

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

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

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

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

($1 = 1.3461 Singapore dollars)

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Reporting by Anshuman Daga in Singapore; Editing by Himani Sarkar and Christopher Cushing

Our standards: The Thomson Reuters Trust Principles.

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