United Overseas Bank Limited (UOB)’s subsidiaries have entered into agreements to acquire Citigroup’s consumer banking businesses comprising its unsecured and secured lending portfolios, wealth management and retail deposit businesses (the Consumer Business) in Indonesia, Malaysia, Thailand, and Vietnam (the Proposed Acquisition).
As part of the Proposed Acquisition, UOB intends to bring onboard the employees in the Consumer Business. The Proposed Acquisition will further strengthen and deepen UOB’s ASEAN franchise
Citigroup’s Consumer Business had an aggregate net asset value of approximately S$4.0 billion and a customer base of about 2.4 million as of 30 June 2021 and generated an income of approximately S$0.5 billion in the first half of 2021. Excluding one-off transaction costs, the Proposed Acquisition is expected to be immediately accretive to UOB’s earnings per share (EPS) and return on equity (ROE).
The total cash consideration for the Proposed Acquisition, will be calculated based on an aggregate premium equivalent to S$915 million-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.
Completion of the acquisition in each country will be conditional on obtaining regulatory approvals relevant to each country 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.
Mr. Wee Ee Cheong, Deputy Chairman and Chief Executive Officer (CEO) of UOB, said, “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.”
