UOB has agreed to amass Citigroup’s consumer banking businesses in Indonesia, Malaysia, Thailand and Vietnam, including its unsecured and secured lending, wealth management and retail deposits portfolios.
UOB pays A$915 million for the proposed acquisition plus the web asset value of Citi’s consumer business as on the closing date of the transaction, the bank said in a stock exchange filing on Friday (Jan 14).
As of June 30, 2021, the buyer company has a complete net asset value of roughly A$4 billion and a customer base of roughly 2.4 million. It earned around A$500 million in the primary half of 2021.
UOB said the deal will strengthen its partner ecosystem and is predicted to triple the bank’s current retail customer base across 4 regions, putting it five years ahead of schedule.
Wee Ee Chong, vice chairman and CEO of UOB, said the deal “will create a strong combination.”
“UOB believes in the long-term potential of Southeast Asia, which is why we have rigorously, selectively and patiently identified the right growth prospects,” he said.
UOB anticipates that the transaction shall be accomplished between mid-2022 and early 2024, subject to regulatory approvals in each country and in Singapore.
Regarding human resources, UOB announced that it intends to integrate the staff of the buyer company as a part of the transaction.
Citi’s consumer business employs roughly 5,000 people, including senior management. UOB said the workforce transfer would strengthen its workforce and enable the corporate to leverage business synergies.
The deal will almost actually be financed with additional money.
UOB expects the merger to be immediately accretive to earnings per share and return on equity, excluding one-time transactions. Additionally, depending on the corporate’s capital position as of September 30, 2021, the acquisition should reduce the Common Equity Tier 1 ratio by 70 basis points to 12.8%.
Credit Suisse (Singapore) is advising UOB on the transaction, while Allen & Overy LLP (Singapore) is advising on legal matters.
UOB shares ended Thursday at S$29.18, down S$0.26 or 0.9 percent.
Source: businesstimes.com.sg
