UnionBank surprise front-runner for Citi’s PH retail business

Aboitiz-led Union Bank of the Philippines is the “preferred bidder” for the Philippine consumer and retail banking assets of American banking giant Citigroup, a report from Bloomberg newswire said.

In the coming weeks, UnionBank will negotiate on the sale in a prospective deal valued at $1 billion, Bloomberg reported on Wednesday, citing anonymous sources.

“It’s somewhat surprising given that one of the top three banks was expected to win,” said Raymond Neil Franco, head of research at local stock brokerage Abacus Securities.

“Citi’s Philippines consumer business should be a good fit for UnionBank’s strength in corporate and treasury. Together with the push into digital banking, it shows UnionBank is serious in expanding its retail segment. But the price has to be right so we’re still waiting for details before reassessing our rating for the stock,” he added.

“We believe the potential acquisition will complement UnionBank’s existing consumer portfolio on the back of Citi’s very strong credit card portfolio. Note that home loans and salary loans account for the bulk of UnionBank’s consumer loans. As such, we expect the acquisition to accelerate UnionBank’s growth in the credit card space,” said John Luciano, banking analyst at COL Financial.

As of end-June, UnionBank ranked 10th among the country’s largest banks, with a total asset base of P646 billion. As of Wednesday’s closing, the bank was valued by the stock market at P130.47 billion.

Aboitiz Equity Ventures, has interests in banking, power, real estate, food production, cement manufacturing and infrastructure. Citi Philippines ranked 12th during the same period, with P353.97 billion in total assets. “It will be good for UnionBank if they can retain the clients,” said Joseph Roxas, president of Eagle Equities Inc.