BNP Paribas is not the only one of the world’s 12 largest banks to sign a deal this week to shed some foreign assets.
Citi has agreed to sell its consumer banking operations in the Philippines to Union Bank of the Philippines for a cash consideration plus a premium equivalent to $908 million, the banks said Thursday.
The deal marks Citi’s third exit from retail banking since announcing in April it would retreat from 13 Eastern Hemisphere markets and focus instead on four hubs with high returns: London, Singapore, Hong Kong and the United Arab Emirates.
The transaction, expected to close in the second half of 2022, includes Citi’s credit-card and wealth-management businesses in the country, along with unsecured lending, deposit and investment businesses and an insurance brokerage.
“We are delivering on our renewed strategy, focusing resources in areas where our global network positions us to deliver optimal growth and returns,” Peter Babej, CEO of Citi’s Asia Pacific operations, said in a statement.
The deal also allows Citi to offload about 1,750 employees who will transfer to Union Bank. The Philippine bank said it also stands to gain roughly 1 million Citi customers, according to The Wall Street Journal.
"We look forward to this game-changing opportunity to leapfrog our credit-card business and significantly expand our banking business in the higher-end segment of the consumer market," Union Bank CEO Edwin Bautista said in a statement seen by Reuters.
Union Bank is buying a business that counted net assets of around $355 million, as of June 30, according to The Wall Street Journal. The bank said the increase in risk-weighted assets required about $193 million in equity.
Citi, meanwhile, said the deal would increase its tangible common equity by about $500 million of the $7 billion it expects to stem from its departure from the 13 markets.
Countries from which Citi still intends to retreat include India, China, Russia, Vietnam, Thailand, Indonesia, Malaysia, Taiwan, Poland and Bahrain.
The bank agreed to sell its Australian consumer banking footprint to National Australia Bank in August. Citi announced in November it would incur between $1.2 billion and $1.5 billion in charges to wind down its retail banking operations in South Korea.
The Philippine sale drew bids from other banks including BDO Unibank, Metropolitan Bank & Trust and Bank of the Philippine Islands, Bloomberg reported in October.
The transaction also spotlights a trend in which large banks with international footprints are consolidating far-flung operations to pour money into a more concentrated network. In the U.S., that has led to Citizens Bank and Cathay Bank picking up a healthy share of HSBC’s branch network this year. U.S. Bank in September agreed to buy Mitsubishi UFJ Financial Group’s U.S. banking arm in an $8 billion deal. And most recently, Bank of Montreal bid $16.3 billion to buy Bank of the West, the U.S. retail banking arm of France’s BNP Paribas.
