DBS, others mull bids for Citi’s business

Banks including DBS Group, Mitsubishi UFJ Financial Group, OCBC and Standard Chartered are set to bid for parts of Citigroup’s consumer business in Asia, people with direct knowledge of the matter said. The sale process will start within a couple of weeks, they added, declining to be named as they were not authorised to speak to media.

The move comes after Citi said it would exit its consumer franchises in 13 markets — 10 of which are in Asia and include India — as it refocusses on its more lucrative institutional and wealth management businesses in these markets.

Potential bids from the regional banks and StanChart, whichmakes most of its profit in Asia, underscores their growingappetite for businesses like credit cards and mortgages in apush to lock in long-term income growth.

The businesses Citi is exiting had $82 billion in assets andwere allocated $7 billion in tangible common equity last year.Citi has plans to reposition its Asian consumer banking businessfrom its “wealth centres” of Hong Kong and Singapore.

As Citi is not giving up its banking licences in most of themarkets it is exiting, the sale of the consumer bankingportfolios and branches will only appeal to lenders withexisting presence in these countries, the people said.

“Asia is critical to our firm’s strategy, and we willallocate resources to drive profitable growth,” a Citi spokesmanin Hong Kong said, declining to comment on the sale process.

Representatives at Japanese lender MUFG and StanChart, andSumitomo Mitsui Financial Group, which the sources saidwas another potential bidder, declined to comment.

“DBS has always been open to exploring sensible bolt-onopportunities in markets where we have a consumer bankingfranchise (China, India, Indonesia and Taiwan) and where we canoverlay our digital capabilities,” Southeast Asia’s biggestlender said in a statement.

In 2016, DBS bought ANZ’s wealth management andretail businesses in five Asian markets for about $80 million.

Citi’s sprawling India consumer business, comprising retaildeposits, mortgages and credit cards, and its Taiwan businesswould be among the most valuable parts of its Asian consumerportfolio, the sources said.

Citi’s consumer banking business in the 13 markets accountedfor $4.2 billion of the bank’s $74.3 billion revenue in 2020.All the markets it is exiting made a combined loss of $40million in the consumer banking business in the same year.

India ‘jewel in the crown’

DBS, the only big foreign bank with a fully owned Indiansubsidiary, is eyeing Citi’s India business, which is also setto attract StanChart and local lenders Kotak Mahindra Bankand Axis Bank, the sources said.

SBI Cards and Payment Services Ltd, a unit ofState Bank of India, is also weighing a bid for Citi’scredit card portfolio in India, two of the sources said.

Citi’s India consumer business is valued at over $2 billion,according to four sources.

“India is the jewel in the crown and will command a betterprice than the other markets,” one of the sources added.

Citi has been in India for decades and was among the firstto introduce Indians to credit cards in 1987. It ranks as thesixth largest local card issuer with nearly 2.7 million cards.

Sources say Citi has a significant share in the premiumsegment, commanding higher spends per card of 10-25% versus theindustry average. It is also among the top five wealthmanagement players, with 35 branches and about 4,000 staff inthe consumer banking segment.

Kotak Mahindra declined to comment, while Axis Bank and SBICards did not respond to a request for comment.

The other markets Citi is exiting as part of its new CEOJane Fraser’s strategy include South Korea, Australia, mainlandChina and Thailand - countries where it does not have thenecessary scale to compete with local rivals.

Singapore’s DBS and OCBC, Britain’s StanChart, and theJapanese lenders are also weighing bids for some of Citi’sSoutheast Asia businesses, the people said.

Citi’s businesses in Australia and South Korea could attractinterest from domestic banks, they added.

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Printable version | May 8, 2021 10:20:59 PM |

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