EastWest eyes Citi’s retail banking assets

Gotianun group-led EastWest Banking Corp. is interested to join the bidding for the Philippine consumer and retail banking assets of American banking giant Citi—an opportunity to break into the roster of the country’s 10 largest banks.

Josephine Gotianun-Yap, president and CEO of EastWest’s parent conglomerate, Filinvest Development Corp., said in a forum with the Economic Journalists Association of the Philippines on Tuesday that the bank was interested in the local assets that Citi would sell.

“EastWest has continuously looked at different merger and acquisition (M&A) portfolios. As you know, they have done three in the past and so they are always on the lookout,” Gotianun-Yap said.

11th largest universal bank

Currently valued by the stock market at around P22 billion, EastWest has about P386 billion in total assets as of end-2020, making it the 11th largest universal bank, based on Bangko Sentral ng Pilipinas data. It ranked fourth highest in terms of profitability last year, with a return on equity of 12.47 percent.

Citi, on the other hand, was the 12th largest universal bank in the country with P331.32 billion in total assets in the same year. It had a P153.75-billion total loan book and P215 billion in deposit base. A significant portion of Citi’s assets formed part of its consumer and retail banking segments.

In the credit card business alone, Citi has about one million customers in the Philippines and is among the top three in terms of share of credit card spending.

In the retail banking segment, Citi has about 50,000 customers, mostly from the affluent clients segments.

As Gotianun-Yap noted, EastWest is no stranger to inorganic expansion. In 2009, this bank bought the consumer banking business of Philamlife when the latter’s US-based parent company, American International Group Inc., was hit by the Wall Street-epicentered global financial crisis. That deal turned it into a significant player in the local credit cards and auto finance markets business.

The next M&A deal was done in 2011 when EastWest purchased the majority of the outstanding shares and control of Green Bank Inc., which allowed the former to expand its network by 46 branches.

In 2012, EastWest bought Finman Rural Bank Inc., which was engaged in the business of extending credit to farmers, tenants, and rural enterprises.

Several banks seen bidding

With Citi now looking to divest its consumer and retail banking assets, many banks are looking to participate in the bidding for local assets as this presents an opportunity to scale up operations in high-margin segments. Ayala-led Bank of the Philippine Islands and SM group-led BDO Unibank, for instance, earlier expressed interest to bid for the same assets.

As part of a global downsizing program, Citi is exiting its consumer and retail banking franchises in 13 jurisdictions: Australia, Bahrain, China, India, Indonesia, Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam. It will keep only the institutional businesses in these markets.

In the Philippines, Citi currently serves 90 percent of the top 20 largest market-cap firms and more than 950 multi-national companies. Last year, it helped raise about $20 billion in corporate funding for local clients. INQ