UnionBank finalizes deal with Citibank, Transaction expected to close next year

Unionbank is set to finalize its acquisition of Citi’s consumer banking business on December 23. UB announced that the deal will cost around P55 billion with a premium of P45.3 billion.

The Aboitiz-led bank plans to fund the transaction through internal sources as well as a stock rights offering (SRO) of P40 billion. The key shareholders, Aboitiz Equity Ventures, Insular Life Assurance, and SSS, are said to be fully committed to subscribing to their respective allocations.

“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,” said Edwin Bautista, president and chief executive officer (CEO) of UnionBank.

In its acquisition, UnionBank will receive Citi’s real-estate interests such as Citibank Square in Eastwood, three full-service branches, five wealth centers, and two bank branch lites.

Citi is the largest foreign bank in the country with assets amounting to P89.5 billion, gross loans of P59.7 billion, and a customer base close to 1 million. Due to the deal, roughly 1,750 Citi employees are expected to move to UnionBank.

“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 Aboitiz, UnionBank chairman.

Peter Babej, Citi Asia Pacific CEO said, “This transaction represents a positive outcome for our clients, our colleagues and our firm…. Citi will continue to serve institutional clients in the Philippines and across [the] 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.”

Additionally, Morgan Stanley is acting as an exclusive financial advisor to UB for the transaction. Milbank LLP and Romulo Mabanta Buenaventura Sayoc & de los Angeles are acting as legal advisors to UnionBank.

The transaction is expected to close sometime in the second half of 2022.

Source: Rappler