KUALA LUMPUR: United Overseas Bank Limited (UOB)’s subsidiaries have entered into agreements to acquire Citigroup’s consumer banking companies in Indonesia, Malaysia, Thailand and Vietnam.
As a part of the proposed acquisition, UOB intends to carry onboard the workers in the consumer business.
In an announcement, UOB stated Citigroup’s consumer business had an combination web asset worth of roughly S$4bil and a buyer base of about 2.4 million as at June 30, 2021 and generated revenue of roughly S$500mil in the primary half of 2021.
Excluding one-off transaction prices, the proposed acquisition is predicted to be instantly accretive to UOB’s earnings per share (EPS) and return on fairness (ROE).
“The total cash consideration for the proposed acquisition, will be calculated based on an aggregate premium equivalent to S$915mil plus the net asset value of the consumer business as at completion.
“The proposed acquisition is expected to be financed through excess capital and estimated to reduce UOB’s CET1 ratio by 70 basis points to 12.8%, based on its capital position as at 30 September 2021.
“The effect to CET1 ratio is not expected to be material and will be well within regulatory requirements,” UOB stated.
The banking group stated the completion of the acquisition in every nation can be conditional on acquiring regulatory approvals related to every nation and in Singapore.
“It is estimated that completion will take place between mid-2022 and early 2024, depending on the progress and outcome of the regulatory approval process.
“Citigroup will assist UOB and its subsidiaries (collectively the UOB Group) with the migration of the customers and employees of its consumer business to ensure a smooth transition,” it added.
UOB deputy chairman and chief government officer Wee Ee Cheong stated: “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.”
“UOB believes in Southeast Asia’s long-term potential and we have been disciplined, selective and patient in seeking the right opportunities to grow.
“Subject to regulatory approval, we look forward to integrating Citigroup’s quality portfolio and welcoming its team, and to creating
value for our enlarged base of customers, employees and other stakeholders.
“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,” he added.
Meanwhile, Citi Asia Pacific chief government officer Peter Babej is assured that UOB, with its robust tradition and broad regional ambitions, will present wonderful alternatives and a long-term dwelling for our consumer banking colleagues in Indonesia, Malaysia, Thailand and Vietnam.
“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 stated.
In a separate assertion, Citi Malaysia chief government officer Usman Ahmed stated the transaction represented a optimistic end result for its purchasers, colleagues and the agency.
“Citi is committed to a seamless execution, and during the transition to closing, there will be no change in the service provided to our consumer banking and wealth customers.
“Malaysia remains a key market for Citi globally and also houses our critical Citi Solutions Centers in Kuala Lumpur and Penang from where we service over 50 countries around the world,” he stated.
