Citi has agreed to sell its consumer banking franchise in the Philippines to UnionBank of the Philippines.
As per the terms of the deal, UnionBank will pay cash consideration for the net assets of the acquired businesses plus a premium of PHP45.3bn ($908m).
UnionBank was selected by the US-based banking group after a competitive auction process.
Included in the deal are Citi’s local credit card, deposit, unsecured lending, and investment businesses and Citicorp Financial Services and Insurance Brokerage Philippines (CFSI).
Upon closing of the transaction, nearly 1,750 consumer bank and supporting employees of the Filipino unit of Citi are likely to transfer to UnionBank.
Citi anticipates the deal to yield around $300m of allocated tangible common equity apart from increasing the tangible common equity of around $500m.
Citi Asia Pacific CEO Peter Babej said: “This transaction represents a positive outcome for our clients, our colleagues and our firm. We are delivering on our renewed strategy, focusing resources in areas where our global network positions us to deliver optimal growth and returns.
“Citi will continue to serve institutional clients in the Philippines and across the Asia Pacific as we have for over a century. We are very pleased with today’s announcement, and we will use the capital generated to invest in our strategic priorities.”
Citi Philippines’ institutional business is said to cater to more than 950 multinational corporations and local corporates with a range of services.
The deal, which is subject to regulatory approvals, is expected to close in the second half of 2022, said Citi.
In April 2021, the American banking group had announced plans to sell its consumer franchises in 13 markets across Asia and Europe, the Middle East, and Africa (EMEA). Through the planned exit, Citi expects to release close to $7bn of allocated tangible common equity over time.
Citi will also exit consumer franchises in Australia, China, Bahrain, India, Korea, Malaysia, Indonesia, Poland, Russia, Thailand, Taiwan, and Vietnam.
Last month, the banking group secured approval from the Australian competition regulator for the sale of its consumer business to the National Australia Bank.
