Global financial monolith Citi completed the sale of its local consumer business operations to UnionBank of the Philippines (UnionBank) in a record-setting consideration of P72 billion .
The transaction covered Citi’s local credit card, unsecured lending, deposit and investment businesses, as well as Citicorp Financial Services and Insurance Brokerage Philippines Inc. (CFSI), which provides insurance and investment products and services.
The value of the deal was based on the cost of the Citi Philippines consumer banking business plus a premium of P45.3 billion.
Unionbank said based on the closing statement as of 30 June 2022, the net asset value of the business was at P26.7 billion.
The transaction will be effected via an asset and liability transfer, sale of shares in Citicorp Financial Services and Insurance Brokerage Philippines Inc. and the sale of the real estate shares in Citibank Square building in Eastwood, Quezon City.
UnionBank takes in workers
Citi said the agreement covers its staff, with approximately 1,540 consumer bank and supporting employees transferring to UnionBank.
The US-based multinational bank is unloading its non-core operations and the sale of its local business is the second divestiture to date among the 14 consumer markets in Asia, Europe, Middle East and Mexico.
Citi’s CEO of Legacy Franchises, Titi Cole, said the transaction was another milestone for the bank’s strategic refresh.
“The sale underlines the progress we continue to make. UnionBank is the optimal owner for our local consumer business and we wish our former employees and customers continued success in the future,” Cole added.
“This transaction represents a positive outcome for our clients, our colleagues and our firm. Citi will continue to serve institutional clients in the Philippines and across our global network as we have for over 120 years,” Citi Philippines CEO Aftab Ahmed said.
“The acquisition accelerates the bank’s goal of becoming the greatest consumer bank in the Philippines as it will strengthen the three consumer businesses namely credit cards, salary and personal loans and mortgage loans,” UnionBank chief customer experience officer and chief digital channel officer Ana Delgado said,
UnionBank President and Chief Executive Officer Edwin Bautista highlighted that the deal is a game changer for UnionBank.
“We added a consumer portfolio that is well-run and very profitable. This will provide us better margins and allow us to maintain our industry-leading return-on-equity,” Bautista indicated.
“The synergies across both organizations will allow us to unlock tremendous value by enriching our customer proposition and elevating customer engagement. To deliver on this commitment, we have set-up a dedicated integration team and are working closely with Citi to ensure a smooth transition.”