KUALA LUMPUR: Citi today has reached an agreement with UOB Group (UOB) on the acquisition of Citi's consumer banking franchises in Indonesia, Malaysia, Thailand and Vietnam.
In a statement today, the banking group said the transaction includes retail banking and credit card businesses but excludes the bank's institutional businesses in all four countries.
Citi remains committed and focused on serving institutional clients in these countries locally, regionally and globally.
The agreement covers all related Citi staff, with approximately 5,000 consumer bank and supporting employees expected to transfer to UOB upon close of the proposed transaction.
UOB will pay Citi in cash for the net assets of the acquired businesses, subject to customary closing adjustments, plus a premium of S$915 million (US$690 million).
Upon closing, Citi expects the transaction to result in the release of approximately US$1.2 billion of allocated tangible common equity, as well as an increase to tangible common equity of over US$200 million.
As previously announced, Citi's exit from its consumer franchises in 13 markets across the Asia Pacific and Europe, the Middle East and Africa (EMEA) is expected to release approximately US$7 billion of allocated tangible common equity over time.
Citi Asia Pacific chief executive officer Peter Babej said the group is confident that UOB will provide excellent opportunities and a long-term home for Citi's consumer banking colleagues in Indonesia, Malaysia, Thailand and Vietnam.
"Focusing our business through these actions will facilitate additional investment in our strategic focus areas, including our institutional network across the Asia Pacific, driving optimal returns for Citi," he said.
Citi Malaysia chief executive officer Usman Ahmed said the transaction represents a positive outcome for the group's clients, colleagues and firm.
"Citi is committed to seamless execution, and during the transition to closing, there will be no change in the service provided to our consumer banking and wealth customers.
"Malaysia remains a key market for Citi globally and also houses our critical Citi Solutions Centers in Kuala Lumpur and Penang from where we service over 50 countries around the world," he said.
Citi said completion of the divestitures in each country will not be conditional on the completion of the divestitures in the other countries but will be conditional on obtaining regulatory approvals relevant to each country.
It is estimated that completion will take place between mid-2022 and early 2024, depending on the progress and outcome of the regulatory approval process.