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Citigroup to sell Taiwan consumer banking business to DBS

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Citigroup to sell Taiwan consumer banking business to DBS

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Citigroup Inc.

VS -0.93%

agreed to sell its consumer banking business in Taiwan to Singapore-based DBS Group Holdings ltd.

DBSDY -0.15%

, the latest in a series of divestitures as it shrinks its international business footprint to focus more on serving businesses and high net worth clients.

The deal, which includes a bonus for Citigroup of more than $700 million, means it has now found buyers for seven of the 10 Asia-Pacific consumer markets it wanted to exit.

Singapore’s largest bank by market value, DBS has acquired since the start of the Covid-19 pandemic, taking over a struggling lender in India and buying a stake in a mainland China bank.

DBS said on Friday it would pay Citigroup the cash equivalent of the transferred net assets plus a premium of S$956 million, or about $706.6 million. In total, it will inject around S$2.2 billion into DBS Taiwan. He said profits from Citigroup operations averaged around S$250 million a year before the pandemic.

The Wall Street Journal reported earlier this month that the two banks were close to reaching an agreement.

Last year, Citigroup announced plans to exit retail banking in 13 markets, including 10 in Asia, as well as Bahrain, Poland and Russia. It concentrates its consumer banking and wealth management activities in Hong Kong, Singapore, London and Dubai.

Citigroup has since closed sales in Australia, the Philippines and four other Southeast Asian countries as it plans to close its South Korean consumer operation. It did not announce any consumer banking deals in India or mainland China.

On Friday, Citigroup said the Taiwanese sale would free up about $800 million of allocated tangible equity and enable it to invest more in key areas, including serving institutional clients in Taiwan.

Showing the US bank’s strategic focus in Asia on its wealth and institutional businesses, Citigroup last year raised more than $200 billion in capital markets for Asian clients, hired more than 650 heritage in Hong Kong and Singapore; and added several billion dollars in client assets, a regional spokesperson said.

DBS will offer jobs to Citigroup’s 3,500 consumer bankers in Taiwan and will take over the vendor’s 45 bank branches. It expects 10% to 20% attrition, given the overlaps in the two businesses, and aims to close the deal in mid-2023.

The sold business has S$20.3 billion, or about S$15 billion, in earning assets and S$15.1 billion in deposits, DBS said on Friday, and will help it become the largest Taiwan’s largest foreign bank in terms of assets.

“Covid-19 notwithstanding, we believe Asia’s long-term growth trends remain intact,” said DBS chief executive Piyush Gupta. “The acquisitions we’ve made since the start of the pandemic have given us a platform to build significant scale in some of our core markets.”

Mr. Gupta said DBS was not seeking to acquire any other regional assets from Citigroup.

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Citigroup to sell Taiwan consumer banking business to DBS

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