Union Bank of the Philippines today announced that it has signed share and business transfer agreements with several subsidiaries of Citi Group (Citi) to acquire Citi’s consumer banking business in the Philippines.
The transaction includes Citi’s credit card, personal loan, wealth management and retail deposit business. The acquisition also includes Citi’s real estate interests in Citibank Plaza, 3 full-service bank branches, 5 wealth centers and 2 bank branches in Eastwood.
Erramon Isidro M. Aboitiz, Chairman Union Bank, Said: “This acquisition further strengthens our position as the leading bank in the Philippines and accelerates our growth aspirations in the retail banking sector.”
UnionBank President and CEO Edwin R. Bautista emphasized: “Citibank Philippines has a strong, profitable and well-run retail portfolio. It owns the third largest credit card franchise and is an excellent wealth management provider in the Philippines. We I look forward to this game-changing opportunity to surpass our credit card business and significantly expand our banking business in the high-end areas of the consumer market.”
Mr. Bautista added: “This collaboration has obvious opportunities for synergy. We intend to learn Citi’s expertise so that UnionBank can effectively build on its success and raise its business to a new level. As we embark on this journey, we are committed to retaining all of Citi’s key talents and insisting on the excellent customer experience that Citi has provided to customers over the years.”
It is expected that approximately 1,750 Citi employees, including senior managers, will join UnionBank. Mr. Aboitiz added: “We look forward to welcoming all employees to the UnionBank family. Due to the strong cultural similarities between these organizations, we believe that Citi employees will feel at home in UnionBank.”
UnionBank is the 7th largest listed bank in the Philippines and is widely regarded as the industry’s leading digital transformation and most innovative bank.
As of June 30, 2021, Citi’s consumer banking business has total assets of 89.5 billion pesos, of which total loans are 59.7 billion pesos, total liabilities are 71.7 billion pesos, of which deposits are 67.8 billion pesos, and the scale of investment management is 95 billion pesos. The customer base is close to 1 million.
The transaction will be through (i) the transfer of assets and liabilities of the consumer banking business of the Citibank Philippines branch, (ii) the sale of shares in Citi Financial Services and Insurance Brokers Philippines, and (iii)) the sale of the Citibank Plaza Building.
UnionBank will pay cash consideration (adjusted according to customary closing) for the net assets of Citi’s consumer business in the Philippines, plus a premium of 45.3 billion Philippine pesos. Based on the expected increase in risk-weighted assets, as of June 30, 2021, the required equity is approximately 9.7 billion Philippine pesos. The acquisition is expected to be financed through a combination of internal resources and stock issuance (SRO). The bank’s major shareholders-Aboitiz Equity Ventures, Insular Life Assurance and Social Security System-are fully committed to SRO.
The transaction with Citigroup is expected to be completed in the second half of 2022. Completion requires the approval of regulatory agencies, including the Monetary Commission of the Central Bank of the Philippines, the Philippine Competition Commission, the Philippine Deposit Insurance Corporation, the Securities and Exchange Commission and the Insurance Industry’s Approval Committee.
Citi will continue to operate its consumer banking business in the Philippines until the completion of the acquisition, and the way it provides services to customers will not immediately change. All consumer banking services, including call centers, Citibank online and mobile banking services, will continue to serve Citi customers as usual. Customers will be contacted in the coming months to provide more detailed information. Citigroup will continue to operate its institutional business in the Philippines.
Morgan Stanley acted as UnionBank’s exclusive international financial advisor in this transaction. Milbank LLP and Romulo Mabanta Buenaventura Sayoc & de los Angeles acted as legal counsel for the UnionBank transaction.
