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UOB to acquire Citibank Indonesia’s consumer business
The acquisition, set to be concluded by late 2023, would double UOB's retail customer base to 1.2 million.
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ingapore-based lender United Overseas Bank (UOB) expects to complete an acquisition of Citibank’s (Citi) retail and credit card business in Indonesia by the fourth quarter of 2023 to strengthen its foothold in Southeast Asia’s largest economy.
UOB said on Friday that the acquisition, subject to regulatory approval from the Financial Services Authority (OJK), would double its Indonesian customer base from 550,000 to around 1.2 million.
This would grow UOB Indonesia's retail business “at a scale we could never get,” said UOB chief financial officer Wai Fai Lee.
He said the acquisition would not disrupt customer activity. Citi would continue serving customers through the Citi brand until UOB got regulatory approval, which was expected for the latter part of this year.
The acquisition is expected to raise UOB’s standing from the ninth-biggest credit card issuer in Indonesia to the fifth-biggest and to make it one of the top 10 retail banks in the country.
In terms of financial impact, the acquisition is expected to directly raise UOB Indonesia’s annual income 1.3-fold and gross loans 1.1-fold.
Citi announced earlier on Friday that it would sell its retail and credit card business in Indonesia, Thailand, Malaysia and Vietnam to UOB for US$3.6 billion. The deal includes transferring around 5,000 employees.
The New York-based lender announced in April last year that it would sell off its business in 13 markets, including Indonesia, as part of chief executive Jane Fraser’s push to slim down the bank.
Read also: citi Indonesia sells its consumer banking arm
Indonesia currently accounts for 18.9 percent of UOB’s total 2.9 million retail customers in the four countries. Thailand provides the biggest customer base at 44.8 percent of the total.
The acquisition would raise Indonesia’s contribution to 22 percent of the new expected total of 5.3 million customers, while Thailand’s contribution would rise to 45.2 percent.
Citi Indonesia chief executive Batara Sianturi said in a statement on Friday that the lender would focus on serving institutional clients after the acquisition.
“Citi is committed to a seamless transaction, and during the transition to closing, there will be no change in the service provided to our consumer banking and wealth customers,” he said.
Citi Indonesia’s net profit sank 55.9 percent year-on-year (yoy) to Rp 868.68 billion ($60.77 million) in the January-to-September period last year, according to its latest financial report.
The lender’s net interest income slumped 18 percent yoy to Rp 2.49 trillion.
