UnionBank gets BSP nod for P55-B Citi PH takeover

UnionBank takeover of Citi’s consumer banking business in the Philippines.

The Aboitiz Group’s Union Bank of the Philippines cleared the final regulatory hurdle before completing the P55-billion takeover of American banking giant Citi’s Philippine business.

UnionBank said in a stock exchange filing on Wednesday the Bangko Sentral ng Pilipinas (BSP) approved the acquisition, which was part of the lender’s strategy to aggressively expand its loans to affluent clients and scale up its credit card business.

The BSP’s approval on July 18 comes after UnionBank secured the go ahead from the Philippine Competition Commission last April.

The deal involves taking over Citi’s credit card, personal loans, wealth management and retail deposits. It also includes Citi’s real estate interests in relation to Citibank Square in Eastwood and several bank branches and wealth centers.

Credit card franchise

Edwin Bautista, UnionBank president and CEO, told the Inquirer last December the transaction would improve the bank’s profitability given Citi’s higher-yielding portfolio of loans. Citi also controls the country’s third largest credit card franchise apart from its wealth management services.

“With the purchase, it’s almost like we’ve accelerated our targets in the higher-end segment by five to 10 years,” Bautista said during the interview.

“We are talking here of about a million credit card customers and every single one of them qualifies for a mortgage or a car loan that Citi does not currently offer. So it’s really a great untapped segment,” he added.

Takeover preparation

In a statement announcing the acquisition, UnionBank had said it was ready to absorb 1,750 Citi employees, including senior managers.

UnionBank, which is owned by the family holding firm, Aboitiz Equity Ventures Inc., had taken earlier steps to prepare for takeover.

Last May 16, it completed a P40-billion stock rights offering to partially pay for the acquisition.

UnionBank issued about 617.2 million common shares priced at P64.81 each. The share sale was also supported by its principal stockholders.

In a report last June 24, Maybank Securities said the Citi acquisition would improve UnionBank’s interest income and net interest margin, helping boost profits by 17.3 percent in 2023.

Maybank assigned a “buy” rating on UnionBank, citing its IT investment and benefits from Citi’s higher-yielding portfolio and customer base.

UnionBank recorded a 45-percent drop in first quarter profits to P2.6 billion due to the absence of “extraordinary trading gains” booked in the same period last year.