Aboitiz-owned Union Bank of the Philippines (UnionBank) announced it has signed a P55 billion agreement to acquire US-based Citi’s consumer banking in the Philippines.

In its announcement, Thursday, Dec. 23, UnionBank said it will pay Citi cash consideration for the net assets of the acquired businesses subject to customary closing adjustments plus a premium of P45.3 billion or $908 million, and P9.7 billion equity for a total of P55 billion.

“Upon closing, Citi expects this transaction to result in the release of approximately $300 million of allocated tangible common equity, as well as an increase to tangible common equity of approximately $500 million,” said Citi in its own separate announcement. The American lender is selling its $7-billion worth of consumer franchises in 13 markets including the Philippines.

Citi said subject to the timing of regulatory approvals, completion is expected in the second half of 2022.

UnionBank, the seventh biggest bank here, said it has negotiated a “Share and Business Transfer Agreement” with Citigroup Inc. subsidiaries and the transaction includes Citi’s credit card, personal loans, wealth management, and retail deposit businesses. They will also buy Citi's real estate assets such as Citibank Square in Eastwood, its three bank branches, two branch-lite units and five wealth centers.

“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,” according UnionBank chairperson, Erramon Isidro M. Aboitiz, in a statement.

UnionBank President and CEO, Edwin R. Bautista, for his part, said Citi’s local bank “has a great, profitable and well-run retail portfolio” with the third biggest credit card franchise and “a pre-eminent wealth management provider” in the country.

“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 Bautista.

He also noted that 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,” said Bautista.

Citi has 1,750 employees who will join UnionBank.

Citi Asia Pacific CEO, Peter Babej, said the “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.”

Babej also said 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 (Dec. 23) announcement, and we will use the capital generated to invest in our strategic priorities,” he added.

Citi’s institutional business in the country has over 950 multinational corporations as clients.