UnionBank Is Acquiring Citi Philippines' Consumer Banking Business. Here's What It Means for Citi Customers

After months of hearsay, it’s finally official: UnionBank of the Philippines will acquire Citigroup’s consumer banking business in the Philippines. The local bank has entered a Share and Business Transfer Agreement with the various subsidiaries of Citigroup Inc. to complete the acquisition. 

UnionBank is the seventh-largest publicly-listed bank in the Philippines, and is known for its fast digital transformation and mobile banking services. With its acquisition of Citi’s Philippine assets, here’s everything that will transfer to UnionBank once the acquisition is complete: 

1| Citi credit cards
2| Citi personal loans
3| Citi wealth management
4| Citi retail deposit businesses
5| Citi’s real estate interests, which cover the Citibank Square in Eastwood, three full-service bank branches, five wealth centers, and two bank branch lites. 

What Does This Mean for Citi Customers? 

All customers will be contacted in the coming months regarding the transition, the next steps, and so forth. So stay tuned for texts, calls, or emails from verified Citi numbers and emails.  

Call centers will continue to operate as usual, as well as online and mobile banking services. 

The regulatory approvals of the acquisition are expected to be completed by the second half of 2022, but Citi customers should not have to worry about changing services until then. As per Citi, the bank is “committed to a seamless transaction.” Citi will continue operations for its consumer banking business as usual until the acquisition is complete, and customers should not experience immediate changes. 

Once the transition is complete, UnionBank says that it is committed to providing the same level of service Citi provided its customers. 

What Does This Mean for Citi Employees? 

“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,” said Erramon Isidro Aboitiz, chairman of UnionBank. 

Approximately 1,750 Citi employees will join UnionBank, and the bank aims to “learn from Citi’s expertise…to effectively build on its success and take the business to the next level.” 

What Does This Mean for UnionBank? 

Citibank Philippines is the third-largest credit card franchise, according to UnionBank’s president and CEO Edwin R. Bautista. It’s also the “pre-eminent” wealth management provider in the country. The deal now gives UnionBank a “game-changing opportunity to leapfrog our credit card business and significantly expand our banking business in the higher-end segment of the consumer market,” said Bautista. 

Citi’s consumer banking assets total P89.5 billion, including gross loans of P59.7 billion, total liabilities of P71.7 billion including deposits of P67.8 billion, investment AUM of P95 billion, and a customer base of close to one million. 

UnionBank will be paying Citi a cash consideration for the net assets of the acquired businesses, plus a premium of P45.3 billion. Including the required equity of P9.7 billion, the total acquisition should cost UnionBank approximately P55 billion. 

The acquisition will be financed through internal resources and a stock rights offering (SRO), with Aboitiz Equity Ventures, Insular Life Assurance, and Social Security System committed to the SRO.

Morgan Stanley is acting as the 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.

What Does This Mean for Citi? 

Citi’s exit from the Philippines is part of the regional office’s larger plan to consolidate its efforts toward select wealth hubs around the world. Citi is exiting its consumer franchises in 13 markets across Asia, Europe, Middle East, and Africa, and this will release $7 billion of allocated tangible equity over time. 

From the Philippines alone, Citi will release $300 million of allocated tangible common equity, as well as an increase to tangible common equity of approximately $500 million. 

Peter Babej, Citi Asia Pacific CEO, said, "This transaction represents a positive outcome for our clients, our colleagues and our firm. We are delivering on our renewed strategy, focusing resources in areas where our global network positions us to deliver optimal growth and returns. Citi will continue to serve institutional clients in the Philippines and across Asia Pacific as we have for over a century. We are very pleased with today’s announcement, and we will use the capital generated to invest in our strategic priorities.”

When Will This All Happen? 

The transaction is expected to close in the second half of 2022, following regulatory approvals from the Monetary Board of the Bangko Sentral ng Pilipinas, Philippine Competition Commission, Philippine Deposit Insurance Corporation, Securities and Exchange Commission, and Insurance Commission.