UnionBank of the Philippines said Thursday it signed a share and business transfer agreement with several subsidiaries of Citigroup Inc. to acquire Citi’s consumer banking business in the Philippines for P55 billion.
The transaction includes Citi’s credit card, personal loans, wealth management and retail deposit businesses. The acquisition also includes Citi’s real estate interests such as Citibank Square in Eastwood, three full service bank branches, five wealth centers and two bank branch lites.
“This acquisition further cements our position as a leading bank in the Philippines, as well as fast-tracks our growth aspirations in the retail banking segment,” said UnionBank chairman Erramon Isidro Aboitiz.
Under the agreement, UnionBank will pay cash 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 about P9.7 billion as of June 30, 2021.
The acquisition is expected to be financed via a combination of internal resources and a stock rights offering. The bank’s key shareholders—Aboitiz Equity Ventures, Insular Life Assurance and Social Security System agreed to the SRO.
It is expected to close in the second half of 2022, which the completion subject to regulatory approvals from the Monetary Board of the Bangko Sentral ng Pilipinas, Philippine Competition Commission, Philippine Deposit Insurance Corp., Securities and Exchange Commission and Insurance Commission.
UnionBank president and chief executive Edwin Bautista said Citibank Philippines has a great, profitable and well-run retail portfolio. “It has the 3rd largest credit card franchise and is a pre-eminent wealth management provider in the Philippines. We look forward to this game-changing opportunity to leapfrog our credit card business and significantly expand our banking business in the higher end segment of the consumer market,” he said.
“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. 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,” Bautista said.
About 1,750 Citi employees, including senior management, are expected to join UnionBank. “We are looking forward to welcoming all employees to the UnionBank family. With the strong cultural similarities between the organizations, we believe Citi’s employees will feel at home at UnionBank,” Aboitiz said.
UnionBank is the seventh largest publicly-listed bank in the Philippines and is widely recognized to be the leading digitally transformed and most innovative bank in the industry. It is among the first to embrace technological innovations to empower customers and is committed to be the Philippines’ leading digitally-transformed bank to best serve the growing needs of Filipinos everywhere.
Citi’s consumer banking business had total assets of P89.5 billion including gross loans of P59.7 billion, total liabilities of P71.7 billion including deposits of P67.8 billion, investment AUM of P95.0 billion and a customer base of close to 1 million as of end-June.
The transaction will be effected via an asset and liability transfer of the consumer banking activities of Citibank N.A., Philippines Branch, the sale of the shares in Citicorp Financial Services and Insurance Brokerage Philippines Inc. and and the sale of Citibank Square building.
Citi said it woud continue to operate its consumer banking business in the Philippines until the completion of the acquisition, with no immediate changes in the way it serves its customers.
“All consumer banking operations, including call centers, Citibank online and mobile banking services, will continue to serve Citi’s customers as usual. Customers will be contacted in the coming months with more details. Citi will continue to operate its institutional business in the Philippines,” Citi said.
Morgan Stanley is the exclusive international financial advisor to UnionBank in the transaction, with Milbank LLP and Romulo Mabanta Buenaventura Sayoc & de los Angeles as the legal advisors.