Citigroup Inc. (NYSE: C) disclosed that it has decided to divest consumer banking franchises in Indonesia, Malaysia, Thailand, and Vietnam. The UOB Group (UOB) has inked an acquisition agreement with Citigroup for the acquisition of its franchises. The deal includes retail banking and credit card businesses but does not include the bank’s institutional businesses in all four countries.
Citi disclosed that the divestiture of these four consumer markets, along with its earlier declared deal, highlights its sense of urgency to complete its strategic refresh. The company is devoted to working in the best interests of its shareholders by focusing its resources on businesses that can deliver growth, as well as growing the capital it returns to shareholders over time.
Furthermore, the pact includes all related Citi staff, with nearly 5,000 consumer bank and backing employees likely to transfer to UOB upon close of the proposed transaction. UOB will offer cash payment for the net assets of the acquired businesses to Citi, dependent on the customary closing adjustments, plus a premium of S$915 million (US$690 million).
In addition, Citi anticipates that the transaction to result in the release of nearly US$1.2 billion of allocated tangible common equity, as well as an increase to tangible common equity of over US$200 million. Earlier, the exit of Citi from its consumer franchises in 13 markets across the Asia Pacific and EMEA is likely to release nearly US$7 billion of allocated tangible common equity over time.