Citigroup agreed to sell its consumer-banking franchises in Indonesia, Malaysia, Thailand, and Vietnam to United Overseas Bank, advancing its strategy to exit most of its retail operations in Asia and free up resources to deploy in wealth management. The New York-based bank on 13 January said the deal includes retail banking and credit-card businesses. Singapore-headquartered UOB will pay Citigroup for the net assets of the businesses to be acquired, plus a premium of $690m. UOB said the net assets were valued at about 4 billion Singapore dollars, the equivalent of $3bn, as of June 2021, and it will acquire about 2.4 million customers. The final sale price could vary because of changes to the businesses’ net assets. Through this transaction, Citigroup said it would sharpen its focus on areas including its institutional network in the Asia-Pacific region. Citigroup in December agreed to sell its consumer banking business in the Philippines to a local lender, and earlier reached a similar deal in Australia. It has opted to wind down its operations in South Korea.
The third-largest US bank by assets, Citigroup has long been the only American company with a sizable retail-banking network across the Asia-Pacific region, in addition to a full-fledged institutional business that ranges from investment banking and corporate lending to cash management and trade finance. The bank said in April last year that it would exit retail operations in 13 markets, 10 of them in the Asia-Pacific region, to focus resources on its wealth-management and institutional client’s business. It expects these divestitures to release about $7bn of allocated tangible common equity over time. In all markets where Citigroup is selling retail franchises, it is retaining consumer-banking licenses, which are also needed for running its local institutional businesses, according to a person familiar with the matter. That means bidders need to have existing licenses to take on these operations, effectively ruling out new entrants to a market. Citigroup said it expects the latest Southeast Asian divestitures to depend on obtaining regulatory approvals in each country. The bank expects about 5,000 staff to transfer to UOB, and the deal to close between mid-2022 and early 2024.