Citi is divesting its business in the Philippines as the lender announced on Thursday that it is selling its consumer banking franchise in the country to UnionBank.
The transaction covers Citi’s local credit card, unsecured lending, deposit and investment businesses. In addition, it includes Citicorp Financial Services and Insurance Brokerage Philippines under which the bank provides insurance and investment products and services to retail customers.
UnionBank will have to pay Citi a cash consideration of the net assets of the acquired businesses, along with a premium of around $908 million.
The two parties have already reached an agreement for the acquisition, which is expected to be closed by the second half of 2022. Moreover, Citi highlighted that it has selected UnionBank after a rigorous auction process.
As a part of the deal, the employment of around 1,750 consumer banking and supporting staff at Citi will be transferred to UnionBank.
Releasing Assets
Citi’s divestment from the specified business in the Philippines is a part of the lender's broad strategy to exit from its consumer franchises in 13 markets across Asia and EMEA, resulting in the release of around $7 billion of allocated tangible common equity. The Philippines business alone will release $300 million worth of allocated tangible common equity.
“This transaction represents a positive outcome for our clients, our colleagues and our firm,” said Peter Babej, the Asia Pacific CEO at Citi.
“We are delivering on our renewed strategy, focusing resources in areas where our global network positions us to deliver optimal growth and returns. Citi will continue to serve institutional clients in the Philippines and across Asia Pacific as we have for over a century. We are very pleased with today’s announcement, and we will use the capital generated to invest in our strategic priorities.”
Earlier this week, BNP Paribas announced the selling of its retail and commercial business in the United States to Canada-based BMO Financial Group for a total consideration of $16.3 billion.
