UnionBank acquires Citigroup’s consumer banking business in the Philippines

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.

Union Bank of the Philippines (UnionBank) has always been among the first to embrace technological innovations to empower its customers. It embraces the future of banking and is committed to be the Philippines’ leading digitally-transformed bank to best serve the growing needs of Filipinos everywhere.  

It has consistently been recognized as of one of Asia’s leading companies, ranking among the country’s top universal banks in terms of profitability and efficiency.  

Over the years, UnionBank has garnered a record-breaking number of awards and recognition including: “Asia Trailblazer Institution of the Year” from Retail Banker International; “Best Bank Transformation in South East Asia 2021” from Global Banking and Finance; “Best Bank for Customer Experience in South East Asia 2021” from Global Brands Magazine; 4-Time “Digital Bank of the Year (2018-2021)” from The Asset Triple A; “Most Recommended Retail Bank in Asia Pacific 2021” from BankQuality.com; “Fastest Growing Fintech Company, South East Asia 2021” for UBX from Global Banking and Finance; back-to-back “Best Bank for SMEs” (2020-2021) from Asiamoney; “SME Bank of the Year – Philippines 2021” from Asian Banking and Finance; “Asia’s Best Bank Transformation” from Euromoney; “Asia-Pacific Retail Bank of the Year” from Retail Banker International; “Top 2 Most Helpful Banks in Asia Pacific during COVID-19” from BankQuality.com; “Asia Pacific Digital Trailblazer” for UnionBank and “DX CEO Asia Pacific” for President and CEO Edwin R. Bautista from IDC Asia Pacific DX Awards; “Best Digital Community Impact Initiative, South East Asia 2020” for UBX from CFI.co; “Fastest Growing Fintech Company, South East Asia 2020” for UBX from Global Brands Magazine; “2020 Digital Banker of the Year in Asia-Pacific” for President and CEO from The Asset; three-time “Best Digital Bank Philippines” from Asiamoney and International Finance Magazine; back-to-back Digital Transformer of the Year Philippines” from IDC DX Awards Philippines; “Best Retail Bank Philippines 2020” from Global Banking and Finance, The Asian Banker and The Digital Banker; “Domestic Retail Bank of the Year Philippines” from Asian Banking & Finance; back-to-back “Best Digital Bank Philippines” & “Most Innovative Cash Management Services Bank Philippines” from Global Banking and Finance; “#1 Best Service Domestic Bank in the Philippines” at the 2020 Asiamoney Cash Management Survey; and “Employer of the Year” awards from Stevie Awards for Great Employers, Asian Banking and Finance, and HR Asia.  

UnionBank stands firm in its promise to power the future of banking through “Tech-Up Pilipinas” to best serve the growing needs of Filipinos everywhere, while pioneering innovations for a better world. 

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.