Citi announced in a release yesterday (09 August), that it has entered an agreement with National Australia Bank Limited (NAB) for the sale of its Australia-based consumer banking business.
The transaction is expected to close in March 2022 following approval by the Commonwealth Treasurer, as well as market regulators, the Australian Prudential Regulation Authority (APRA) and the Australian Competition and Consumer Commission (ACCC).
Following completion, Citi will transfer to NAB its full Australian consumer banking business, which includes residential mortgages, deposits and unsecured lending, along with 800 employees.
The move is part of an ongoing strategic review announced by the bank in an SEC filing in April, in which the bank detailed it would direct investment and resource to the areas of the business with the greatest scale and growth potential.
A spokesperson for Citi in Asia told FinanceAsia that the bank will invest in its wealth business and will continue to support its institutional clients. It aims to add $150 billion in assets under management (AUM) by 2025, supported by the recruitment of 2,300 wealth staff to its workforce, including 1,100 relationship managers and private banking staff.
He added that Asia is a strategic priority for Citi globally. It is the bank's largest region outside its home market, with approximately $15 billion achieved in revenue in 2020.
He noted that so far this year, the bank has added 650 wealth professionals to its business, and year-to-date the bank has grown AUM in the region to over $15 billion. It has helped Asian clients raise over $100 billion from global capital markets in the same period.
The SEC filing detailed that Citi's strategy would see it refocus its consumer banking effort around four key wealth centres; Hong Kong and Singapore – which the spokesperson confirmed to FA both constitute the bank’s largest consumer markets – as well as London, and the UAE.
The filing announced the bank’s planned withdrawal from consumer franchises in 13 markets across Asia and EMEA where Citi CEO, Jane Fraser, noted that the bank does not have the scale to compete; Australia, Bahrain, China, India, Indonesia, Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam.
The transaction, which is structured primarily as an asset and liability transfer, will see NAB pay Citigroup cash for the net assets of the consumer business, plus a premium of A $250 million (US $183.83 million). The required equity for the transaction totals A $1.2 billion and the deal will be fully funded by NAB's existing balance sheet resources, according to a release by the acquiror.
In the statement, NAB CEO, Ross McEwan detailed the acquisition as supporting NAB’s strategic growth ambition for its Personal Banking business, bringing scale and expertise in unsecured lending - particularly credit cards, which he noted “continue to be an important way for customers to make payments and manage their cashflows”.
He said that the acquisition would enable access to a greater share of payments and transaction data will help drive product and service innovation. He added, “Citigroup’s management team has also built strong white label partnerships with household names in the airline, retail and financial services sectors over many years. This expertise, together with our commitment to deliver market leading products and services, provides an opportunity to grow with existing partners and add new partners.”
In a call with analysts, McEwan said that NAB wants to "stay very strongly in the white label business."
Rachel Slade, group executive for Personal Banking at NAB also added in the call that, “between now and completion we will be undertaking some more detailed work to identify the opportunities to integrate the wealth business.. and to enhance the product and service offering for those acquired customers.”
The Citi spokesperson detailed that the auction process was competitive, with other contenders including local Australian banks as well as foreign participants.
