Completion is expected to take place between mid-2022 and early 2024.
UOB Group announced, on Jan 14, that it is acquiring Citi’s consumer business in Indonesia, Malaysia, Thailand and Vietnam. The proposed acquisition, which will cost UOB nearly $5 billion, is said to further strengthen and deepen UOB’s Asean franchise.
On Sept 27, 2021, UOB was reported to be among one of the potential bidders for Citi's consumer assets in Malaysia.
In December 2021, UOB and Standard Chartered were said to be among Citi's preferred bidder for its consumer assets.
The total cash consideration for the proposed acquisition will be calculated based on an aggregate premium equivalent to $915 million plus the net asset value of the consumer business as at completion.
Citi’s consumer business comprises its secured and unsecured lending portfolios, wealth management and retail deposit businesses.
The business has a net aggregate value of around $4 billion and a customer base of about 2.4 million as at June 30, 2021. In the 1HFY2021, Citi’s businesses generated income of some $0.5 billion.
UOB will bring the employees from these businesses on board, as part of the acquisition. There are a total of around 5,000 employees within the businesses.
The proposed acquisition is expected to be financed through excess capital. It is also estimated to reduce UOB’s Common Equity Tier-1 (CET1) ratio by 70 basis points to 12.8%, based on its capital position as at Sept 30, 2021. The effect to the bank's CET1 ratio is not expected to be material and will be well within regulatory requirements.
The acquisition is slated for completion between mid-2022 and early 2024.
Wee Ee Cheong, deputy chairman and CEO of UOB calls this acquisition a "great opportunity that comes at the right time."
The bank believes in Southeast Asia’s long-term potential and Wee says UOB has 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,” adds Wee.
Peter Babej, Citi Asia Pacific CEO, is confident that UOB will provide "excellent opportunities and a long-term home" for the Citi staff involved.
"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 adds.
Credit Suisse (Singapore) is the appointed financial adviser to UOB Group; Allen & Overy LLP (Singapore) were acting as the bank’s legal advisers.
Shares in UOB closed flat at $29.18 on Jan 13.