The transaction will include Citi’s retail banking, credit card, mortgage and unsecured lending businesses, but excludes its institutional businesses
DBS will merge the Citi’s business with DBS Taiwan. (Credit: DBS Bank Ltd.)
DBS Bank has agreed to acquire Citigroup’s consumer banking business in Taiwan (operating as Citi Consumer Taiwan), by paying for the net assets, in addition to a premium of around SGD956m ($706m).
The transaction will include Citi’s retail banking, credit card, mortgage and unsecured lending businesses, but excludes its institutional businesses.
DBS is expected to shift around 3,500 employees from Citi Consumer Taiwan, which has 2.7 million credit cards, 500,000 deposit and wealth customers, and 45 branches.
Citi’s consumer banking business in Taiwan had earning assets base of around SGD20.3bn and total deposits worth SGD15.1bn, as of 30 September 2021.
The acquisition follows Citi’s decision to exit from 13 markets across the Asia Pacific and EMEA.
With the transaction, the company is expected to benefit from around $800m of allocated tangible common equity, and around $7bn through the exit from other markets.
Its closing is expected in mid-2023, subject to customary regulatory conditions.
Citi Asia Pacific CEO Peter Babej said: “We are very pleased to announce this transaction with DBS, a leading organisation with a strong consumer growth strategy in Taiwan which we are confident will provide our customers and employees with excellent opportunities.
“For Citi, this transaction will enable additional investment in our strategic focus areas, including our institutional businesses in Taiwan, which remains a priority market for our firm.”
Upon completion of the transaction, DBS intends to combine Citi Consumer Taiwan with DBS Taiwan, which has been operating in the country since 1983.
Also, the group is planning to inject SGD2.2bn capital into DBS Taiwan.
According to the company, the acquisition would help scale up DBS Taiwan, combine its strengths with the high-returns franchise, and advance its growth.
The acquisition would have a 0.7% impact on the capital ratio of DBS Group, which intends to fund the deal through available capital, without betting on its ability to pay dividends.
Morgan Stanley served as a financial advisor to DBS, while Citi’s Banking, Capital Markets and Advisory Group served as exclusive financial advisor to Citi, on the transaction.
DBS Group CEO Piyush Gupta said: “The acquisitions we have made since the start of the pandemic have given us a platform to build meaningful scale in some of our core markets. This acquisition is no exception.
“Citi Consumer Taiwan is a highly attractive, high-returns business that is expected to contribute at least SGD 250 million annually in net profit to DBS after Covid-19 recovery. Post-transaction, DBS Taiwan will be propelled to the top ranks of Taiwan’s banking sector.”