Citi's consumer business, which offers credit cards, loans, retail banking, mortgages and wealth management solutions for high-net-worth individuals in Australia, holds deposits worth A$9bn ($6.5bn)
National Australia Bank (NAB) has reached an agreement with Citigroup to purchase the latter’s consumer bank business in Australia for a total of $882m.
The announcement follows Citi’s agreement with Banco Nacional de Crédito (BNC) last month, to exit Venezuela with the sale of its operations in the country.
Citi’s consumer business offers credit cards, loans, retail banking, mortgages and wealth management solutions for high-net-worth individuals in Australia.
The acquisition includes residential mortgages valuing around A$7.9bn ($5.7bn), deposits worth A$9.0bn ($6.5bn) and unsecured lending of A$4.3bn ($3.1bn).
The transaction is expected to be closed March 2022, subject to certain conditions, including approvals from the Commonwealth Treasurer, APRA and the ACCC.
Citi CEO Jane Fraser said: “This is a positive outcome for our clients, our colleagues and for Citi. As this transaction shows, we are moving forward with urgency as we refresh our strategy and execute the decisions we have already made as part of that effort.
“We are focusing our resources on businesses where we have scale and competitive advantages in order to deliver growth and improved returns over time.
“In addition to serving our Wealth clients through four global hubs, we will continue to serve our institutional clients in Australia, as we have for nearly a century, and across the greater Asia Pacific region.
“We are very pleased with the economics of the transaction and we will use the capital generated to invest in our strategic priorities, as well as to continue to return capital to our shareholders.”
Upon closing, Citi will transfer its Australian business unit to NAB, along with nearly 800 of its employees.
The bank is expected to continue its operations until closing of the proposed acquisition, with no immediate changes in offering services to its consumer banking and wealth customers.
NAB intends to fund the acquisition through its existing balance sheet resources.
Also, the company will release around $220m capital for three years after the migration of the Citigroup consumer business to NAB.
Citi said that NAB has been selected following an auction process for the sale of its consumer banking business.
However, its Australian institutional business is not included in the transaction.
Citi’s institutional business offers a wide range of investment and banking services to nearly 1500 corporates, banks, governments and institutional investors in the country.
NAB CEO Ross McEwan said: “The proposed acquisition supported NAB’s strategic growth ambition for its Personal Banking business.
“The proposed acquisition of the Citigroup Consumer Business brings scale and deep expertise in unsecured lending, particularly credit cards, which continue to be an important way for customers to make payments and manage their cashflows.
“The cards and payments sector is rapidly evolving and access to a greater share of payments and transaction data will help drive product and service innovation across our Personal Banking business and deliver market leading customer experiences.”