UOB Group acquires Citigroup’s consumer business in Vietnam and elsewhere in ASEAN

On January 14, in Ho Chi Minh City, subsidiaries of Singapore’s United Overseas Bank (UOB) reached an agreement to acquire Citigroup’s consumer banking businesses for SGD4.915 billion ($3.65 billion).

The business range, which is specified as “the consumer business” in the agreement, consists of unsecured and secured lending portfolios, wealth management, and retail deposit businesses in Indonesia, Malaysia, Thailand, and Vietnam. UOB intends to bring onboard employees in the consumer business as part of the proposed acquisition. The acquisition will further strengthen and deepen its ASEAN franchise.

Citigroup’s consumer business had an aggregate net asset value of approximately SGD4 billion ($2.97 billion) and a customer base of about 2.4 million as of June 30, 2021, and generated income of approximately SGD500 million ($371.86 million) in the first half of 2021. Excluding one-off transaction costs, the acquisition is expected to be immediately accretive to UOB’s earnings per share and return on equity.

The total cash consideration for the acquisition will be calculated based on an aggregate premium equivalent to SGD915 million ($680.54 million) plus the net asset value of the consumer business at completion.

The proposed acquisition is expected to be financed through excess capital and is estimated to reduce UOB’s CET1 ratio by 70 basis points to 12.8 per cent, based on its capital position as of September 30, 2021.

Completion of the acquisition will be subject to regulatory approvals in each country and Singapore and is estimated to occur between mid-2022 and early 2024, depending on the progress and outcome of the regulatory approval process. Citigroup will assist UOB and its subsidiaries with the migration of involved customers and employees to ensure a smooth transition.

“The acquisition of Citigroup’s retail business in our key markets of Indonesia, Malaysia, Thailand, and Vietnam is a great opportunity that comes at the right time,” said Mr. Wee Ee Cheong, Deputy Chairman and CEO of UOB. UOB sees the potential in the Southeast Asian market and has sought opportunities in the region. Mr. Cheong said that it expects the deal to create value for its enlarged base of customers, employees, and stakeholders, scale up its business, and advance its position as a leading regional bank.

“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,” said Mr. Peter Babej, CEO of Citi Asia Pacific.