KUALA LUMPUR (Jan 14): United Overseas Bank Ltd (UOB) has entered into agreements to acquire Citigroup’s consumer banking businesses comprising its unsecured and secured lending portfolios, wealth management and retail deposit businesses in Indonesia, Malaysia, Thailand and Vietnam.
In a statement Friday (Jan 14), UOB said as part of the acquisition, the group intends to bring onboard the employees in the consumer business, adding that this will further strengthen and deepen UOB’s ASEAN franchise.
It said the total cash price for the acquisition will be calculated based on an aggregate premium equivalent to S$915 million (about RM2.85 billion) plus the net asset value of the consumer business as at completion.
It must be noted that there has not been such a sizeable acquisition deal between two foreign banks in Malaysia in past decade, if not longer.
UOB said the 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 Sept 30, 2021. It said 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.
UOB estimates that completion will take place between mid-2022 and early 2024.
UOB deputy chairman and chief executive officer Wee Ee Cheong said the acquisition was a great opportunity that came 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.
“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 said.
Meanwhile, Citi Asia Pacific CEO Peter Babej said Citi is confident that UOB, with its strong culture and broad regional ambitions, will provide excellent opportunities and a long-term home for its 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 said.
In a separate statement, Citi Malaysia chief executive officer Usman Ahmed said Citi is committed to a seamless execution, and during the transition to closing, there will be no change in the service provided to its 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 said.