UnionBank bags Citi's Philippine consumer banking business in ₱55-B deal

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Metro Manila (CNN Philippines, December 23) — UnionBank of the Philippines is absorbing Citigroup’s consumer banking business in the country in an agreement worth ₱55 billion, both firms announced Thursday.

“UnionBank will pay a cash consideration for the net assets of the Citi Philippines consumer business (subject to customary closing adjustments) plus a premium of P45.3 billion. Based on the anticipated increase in risk-weighted assets, the required equity is approximately P9.7 billion as of 30 June 2021,” its disclosure to the local bourse read.

The purchase will be funded by a combination of internal resources and a stock rights offering, the Aboitiz-led bank added.

“UnionBank was selected by Citi following an extensive and competitive auction process,” Citigroup said in a statement emailed to CNN Philippines.

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UnionBank also said that the transaction includes the American banking giant’s credit card, personal loans, wealth management, and retail deposit businesses in the Philippines.

Also covered are its real estate interests related to Citibank Square in Eastwood, three full service branches, five wealth centers, and two bank branch lites, the listed firm added.

At least 1,750 Citi employees are expected to join UnionBank given the deal, including senior management.

The transaction is expected to close in the latter half of 2022, according to UnionBank, stressing the completion is subject to regulatory approvals.

“Citi is committed to a seamless transaction, and during the transition to closing, there will be no change in service provided to our consumer banking and wealth customers,” said the American bank.

UnionBank chairman Erramon Isidro Aboitiz, meanwhile, said the acquisition “further cements [their] position as a leading bank in the Philippines, as well as fast-tracks [their] growth aspirations in the retail banking segment.”

UnionBank president and chief executive officer Edwin Bautista also welcomed the deal, noting Citibank is the country’s third largest credit card franchise and among its pre-eminent wealth management providers.

“There are clear synergistic opportunities in this engagement. We intend to learn from Citi’s expertise to enable UnionBank to effectively build on its success and take the business to the next level,” said Bautista.

“As we embark on this journey, we are committed to retain all of Citi’s key talents and uphold the superior customer experience that Citi has delivered to its customers over the years,” he added.

Citi Asia Pacific CEO Peter Babej said the deal “represents a positive outcome” for both their company and its stakeholders. He also affirmed they are delivering on strategy to focus resources in areas of 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,” said Babej.

UnionBank first confirmed talks with Citi earlier this December. Citi, meanwhile, announced its consumer banking exit from the Philippines last April.