UnionBank of the Philippines announced today that it has entered into a Share and Business Transfer Agreement with various subsidiaries of Citigroup Inc. (Citi) to acquire Citi’s consumer banking business in the Philippines.
The transaction includes Citi’s credit card, personal loans, wealth management, and retail deposit businesses. The acquisition also includes Citi’s real estate interests in relation to Citibank Square in Eastwood, 3 full service bank branches, 5 wealth centers, and 2 bank branch lites.
Erramon Isidro M. Aboitiz, Chairman of UnionBank, said, “This acquisition further cements our position as a leading bank in the Philippines, as well as fast-tracks our growth aspirations in the retail banking segment.”
Edwin R. Bautista, President and Chief Executive Officer of UnionBank, highlighted that, “Citibank Philippines has a great, profitable and well-run retail portfolio. It has the 3rd largest credit card franchise and is a pre-eminent wealth management provider in the Philippines. 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.”
Mr. Bautista added, “There are clear synergistic opportunities in this engagement. We intend to learn from Citi’s expertise to enable UnionBank to effectively build on its success and take the business to the next level. As we embark on this journey, we are committed to retain all of Citi’s key talents and uphold the superior customer experience that Citi has delivered to its customers over the years.”
Approximately 1,750 Citi employees, including senior management, are expected to join UnionBank. Mr. Aboitiz added, “We are looking forward to welcoming all employees to the UnionBank family. With the strong cultural similarities between the organizations, we believe Citi’s employees will feel at home at UnionBank.”
UnionBank is the 7th largest publicly-listed bank in the Philippines and widely recognized to be the leading digitally transformed and most innovative bank in the industry.
As of 30 June 2021, Citi’s consumer banking business has total assets of Php 89.5 billion including gross loans of Php 59.7 billion, total liabilities of Php 71.7 billion including deposits of Php 67.8 billion, investment AUM of Php 95.0 billion, and a customer base of close to 1 million.
The transaction will be effected via (i) an asset and liability transfer of the consumer banking activities of Citibank, N.A., Philippines Branch, (ii) the sale of the shares in Citicorp Financial Services and Insurance Brokerage Philippines, Inc., and (iii) and the sale of Citibank Square building.
UnionBank will pay a cash consideration for the net assets of the Citi Philippines consumer business (subject to customary closing adjustments) plus a premium of PHP 45.3 billion. Based on the anticipated increase in risk-weighted assets, the required equity is approximately Php 9.7 billion as of 30 June 2021. The acquisition is expected to be financed via a combination of internal resources and a stock rights offering (SRO). The Bank’s key shareholders – Aboitiz Equity Ventures, Insular Life Assurance, and Social Security System – are fully committed to the SRO.
The transaction with Citi is expected to close in the second half of 2022. Completion is subject to regulatory approvals, including from the Monetary Board of the Bangko Sentral ng Pilipinas, Philippine Competition Commission, Philippine Deposit Insurance Corporation, Securities and Exchange Commission, and Insurance Commission.
Citi will continue to operate its consumer banking business in the Philippines until completion of the acquisition, with no immediate changes in the way it serves its customers. All consumer banking operations, including call centers, Citibank online and mobile banking services, will continue to serve Citi’s customers as usual. Customers will be contacted in the coming months with more details. Citi will continue to operate its institutional business in the Philippines.
Morgan Stanley is acting as exclusive international financial advisor to UnionBank in respect of the transaction. Milbank LLP and Romulo Mabanta Buenaventura Sayoc & de los Angeles are acting as legal advisors to UnionBank in respect of the transaction.