Citigroup Inc. (Citi) announced last year in April that the group would be exiting retail banking in 13 markets. One of those markets was Malaysia. The strategic move was done to double down on growth and wealth.
However, it seems the change isn’t over. Today (14th January), Citigroup announced that they would be selling its consumer banking business in Malaysia, Indonesia, Thailand and Vietnam. The businesses are being sold to the United Overseas Bank (UOB) for about S$4.9 billion (~RM15 billion).
UOB is currently Southeast Asia’s third-largest lender. As such, Citigroup is confident that UOB will be able to “provide excellent opportunities and a long-term home” for their consumer banking colleagues. Additionally, they are expecting about 5,000 employees to transfer to UOB, once the deal has been closed.
As per agreement, UOB will supposedly be acquiring unsecured and secured lending portfolios, wealth management and retail deposit units of Citi’s consumer banking business. Additionally, UOB will be paying Citigroup for the net assets of acquired businesses and a premium of $915 million. This will be financed via the bank’s excess capital. Although this will include Citi’s retail banking and credit card businesses, it excludes institutional offerings in the four countries.
This move will give UOB a greater presence in the region, which is well in line with the bank’s intentions. According to Mr Wee Ee Cheong, UOB’s chief executive officer in Singapore, the bank has been planning to scale up for a long time. As such, Citi’s move is an opportunity they didn’t want to pass up.
Both parties are expecting the deal to be completed mid 2022 to early 2024. UOB predicts it will be serving approximately 10 million customers in the regions by then.
As it turns out, Southeast Asia isn’t the only region experiencing changes. Citigroup will also be exiting consumer, small business and middle market banking businesses in Mexico.