Transaction tax

Citigroup sells its Australian consumer business to NAB for $ 882 million


Updates from Citigroup Inc

Citigroup sold its Australian consumer business to the National Australia Bank for approximately A $ 1.2 billion (US $ 882 million) in the first phase of an exit from its underperforming retail units in Asia and in Eastern Europe.

As part of the deal announced on Monday, Citi will transfer A $ 12.2 billion in loans and A $ 9 billion in deposits to NAB, Australia’s fourth largest bank by market capitalization. About 800 Citi employees will move to NAB, which said the transaction will support the growth of its personal banking business.

The divestiture follows a decision in April by Jane Fraser, recently appointed CEO of Citi, to list its 13 consumer operations in Asia and Eastern Europe with the aim of increasing profitability. Rather, Citi will focus its wealth management activities in Asia through hubs in Hong Kong and Singapore, where it will also maintain its consumer banking units.

“This is a positive result for our customers, our colleagues and for Citi. As this transaction demonstrates, we are moving forward with urgency as we refresh our strategy and execute the decisions we have already made as part of this effort, ”said Fraser.

“We are focusing our resources on companies where we have a competitive size and advantage in order to generate growth and better returns over time,” she added.

Citi’s Australian institutional operations are not included in the transaction. The US bank said it will continue to serve its institutional clients in the country and in the Asia-Pacific region.

Fraser said the first round of Australian retail auctions was “competitive” last month as the bank announced its second quarter results, but did not say whether Citi expected to make a profit or a loss on the sale.

British firm Standard Chartered, Singaporean group DBS and Japan’s MUFG are among the banks in talks with Citi over acquiring its retail banking business elsewhere in Asia.

The Australian transaction is expected to be finalized by March 2022 and requires regulatory approval from the country’s authorities.

Ross McEwan, chief executive of NAB, said the acquisition will support the bank’s growth in personal banking and unsecured loans.

“The proposed acquisition. . . brings breadth and in-depth expertise in unsecured loans, particularly credit cards, ”said McEwan.

NAB said the deal was structured as a transfer of assets and liabilities for the net assets of Citi’s consumer business, plus a cash bonus of A $ 250 million. The equity value of A $ 1.2 billion implied a multiple of eight times the after-tax net profit of A $ 145 million for Citi’s Australian consumer business for the 12 months through June.

Nathan Zaia, analyst with the Morningstar research group, said the deal made sense to NAB, even as the Australian credit card market is disrupted by “buy now, pay later” (BNPL) rivals. Citi has already announced a BNPL offer in Australia in partnership with Mastercard.

“Credit cards remain an important product and we believe the BNPL functionality that will be added will help slow consumer adoption of other BNPL vanilla offerings,” Zaia said.


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