Citi to sell Southeast Asia retail business to Singapore’s UOB for US $3.7bn

REUTERS: Citigroup (C.N) has agreed to sell its consumer business in four Southeast Asian markets to United Overseas Bank (UOB) for about S$5 billion (US $3.7 billion), bringing the U.S. bank closer to its goal of exiting retail operations in 13 markets.

The proposed acquisition by Singapore’s UOB will be its biggest in two decades and double its retail customer base in the four markets in Southeast Asia, where the bank already has a substantial presence and competes with larger rivals including DBS Group and OCBC.

“From the integration standpoint, acquiring from a single, reputable seller with a uniform franchise will reduce complexity. One bank, one platform, one model,” Wee Ee Cheong, UOB’s deputy chairman and chief executive, told reporters and analysts at a briefing on Friday.

UOB, Southeast Asia’s third-largest bank, is acquiring Citi’s unsecured and secured lending portfolios, wealth management and retail deposit businesses in the four countries. This includes 24 branches. Citi’s consumer business in the markets employs about 5,000 employees, who will be transferred to UOB.

Kevin Kwek, a senior analyst at Sanford C. Bernstein, said the deal will help UOB to “play a bit of catch-up on scale”.
“It’s good in that it is small and affordable, and at 1.2 times book, not too bad for Citi’s assets which are known to be high quality.”

UOB shares rose 2.7 percent to a four-year high.
Citi’s exit from Southeast Asia comes after CEO Jane Fraser said last year the bank would close retail operations in 13 markets, including 10 in Asia, to refocus on its more lucrative institutional and wealth management businesses. 

“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,” Peter Babej, Citi’s Asia Pacific CEO, said in a statement.

Last year, Citi agreed to sell its Philippines’ consumer banking franchise, wound down its South Korean consumer bank and sold its Australian consumer banking business.

Citigroup had also announced plans to exit retail operations in India, Taiwan and China.