Markets

Singapore’s UOB to purchase Citi retail arms in 4 Southeast Asia markets for $3.65 bln

A person passes by a UOB financial institution department in Singapore November 4, 2020. REUTERS/Edgar Su

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  • UOB shopping for Indonesia, Malaysia, Thailand and Vietnam operations
  • To fund retail enterprise acquisition with inside capital
  • Buy will double UOB’s retail enterprise in 4 markets
  • Citi’s sale is a part of technique to deal with wealth administration

SINGAPORE, Jan 14 (Reuters) – Singapore lender United Abroad Financial institution (UOB) (UOBH.SI) has agreed to purchase Citigroup’s (C.N) shopper companies in Indonesia, Malaysia, Thailand and Vietnam for about S$4.915 billion ($3.65 billion), funding the acquisition with the financial institution’s extra capital.

The proposed acquisition, UOB’s largest in twenty years, will double the group’s retail buyer base within the 4 markets in Southeast Asia, the place UOB already has a big presence and competes with Singapore rivals DBS Group (DBSM.SI) and OCBC (OCBC.SI).

UOB stated in a press release that it will purchase Citi’s unsecured and secured lending portfolios, wealth administration and retail deposit companies within the 4 international locations.

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“UOB believes in Southeast Asia’s long-term potential and we’ve been disciplined, selective and affected person in searching for the suitable alternatives to develop,” stated Wee Ee Cheong, UOB’s deputy chairman and chief government.

The financial institution stated the proposed acquisition is predicted to be financed by means of its extra capital, and it stays snug sustaining its dividend coverage of a 50% dividend payout ratio.

Citi’s shopper enterprise within the 4 markets employs about 5,000 staff, who will probably be transferred to UOB.

“The entire money consideration for the proposed acquisition, will probably be calculated primarily based on an combination premium equal to S$915 million plus the web asset worth of the patron enterprise as at completion,” UOB stated.

It stated Citigroup’s shopper enterprise in these markets had an combination internet asset worth of about S$4 billion and a buyer base of about 2.4 million as at 30 June 2021. These generated revenue of about S$0.5 billion within the first half of 2021.

Citi’s exit from the 4 markets comes after CEO Jane Fraser introduced a technique final 12 months of closing retail operations in 13 markets, 10 of that are in Asia, because it refocuses on its extra profitable institutional and wealth administration companies. learn extra

Final 12 months, Citi agreed to promote its Philippines’ shopper banking franchise, wound down its South Korean shopper financial institution and bought its Australian shopper banking enterprise.

Citigroup had additionally introduced plans to exit retail operations in India, Taiwan and China.

Credit score Suisse (Singapore) is the monetary adviser to UOB on the most recent deal, whereas Allen & Overy LLP (Singapore) is the authorized adviser.

($1 = 1.3461 Singapore {dollars})

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Reporting by Anshuman Daga in Singapore; Enhancing by Kenneth Maxwell

Our Requirements: The Thomson Reuters Belief Ideas.

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