National Australia Bank (NAB) was reported to be buying the consumer banking subsidiary of Citi to create the second-largest credit card provider in Australia.
|The sale agreement furthers Citi’s global strategy of focusing its resources on businesses that can drive stronger growth. |
NAB – one of the four largest lenders in Australia – has just confirmed a deal to acquire Citibank’s consumer banking arm in Australia. The move is expected to create the second-largest credit card provider in Australia.
According to Nikkei Asia, the buyout is roughly worth A$1.2 billion ($882.24 million). The deal is also reported to include over A$12 billion ($8.809 billion) in loans and A$9 billion ($6.607 billion) in retail deposits.
Furthermore, NAB will pay a sweetener of A$250 million ($) in cash to Citigroup to secure control of its home loans, consumer banking, and private wealth management arms. Citigroup's 800 employees will transfer to NAB.
The move has been igniting rumours for several weeks before finding confirmation. NAB’s shares have risen steadily since mid-June when rumours of the move hit the market, Brokernews reported.
In early July, NAB was reported to be the most promising bidder for Citi’s retail arm.
CEO of NAB, Ross McEwan, said that the bank had purchased Citigroup in part to advance its credit card portfolio and assist in the personal banking space.
“The proposed acquisition of the Citigroup consumer business brings scale and deep expertise in unsecured lending, particularly credit cards, which continue to be an important way for customers to make payments and manage their cashflows,” McEwan said. “The cards and payments sector is rapidly evolving and access to a greater share of payments and transaction data will help drive product and service innovation across our personal banking business and deliver market-leading customer experiences.”
“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," he added.
According to Mortgage Business, Citi Australia CEO Marc Luet also spoke about the proposed deal, stating that it "is a very positive outcome for our clients, our colleagues, and for Citi".
"The sale agreement furthers Citi’s global strategy of focusing its resources on businesses that can drive stronger growth, deliver scale, and enhance returns, which includes our institutional clients group businesses in Australia. Citi has been in Australia for close to a century and it remains an important growth market for the bank,” Luet said.
NAB entered Vietnam in 2014, then exited the market in 2019 after State Bank Governor Le Minh Hung issued a decision to revoke the license of its representative office.
NAB was responsible for carrying out procedures for terminating operations and closing representative offices in accordance with regulations.
On the other hand, Citi said in April that it would exit consumer businesses in 13 markets, including Australia and Vietnam, as part of a new strategy.
“Citi has been operating in Vietnam for several decades and the global announcement about strategic actions in consumer banking across 13 of our markets does not in any way dilute our long-term commitment to Vietnam or the Asia-Pacific region. With this strategic re-positioning, we will be able to further invest our resources in significantly growing our institutional business in Vietnam,” said Interim Vietnam Citi country officer Lai Minh Thuy.