(10 August 2021 – Australia) Citi has announced that it has reached an agreement with NAB for the acquisition of its retail banking unit in Australia.
Following confirmation NAB in advanced deliberations about absorbing Citi’s consumer business, the group’s have reached an agreement.
Citi’s Australian consumer bank will be transferred to NAB together with around 800 Citi employees. The proposed acquisition is structured primarily as an asset and liability transfer, with NAB to pay Citigroup cash for the net assets of the Citigroup Consumer Business plus a premium of A$250 million.
The completion of the deal is expected to occur by the end of Q1 2022, subject to the timing of regulatory approvals. The full integration is expected to be completed by H2 2024 and includes Citi’s A$7.9 billion mortgage book, A$4.3 billion of unsecured lending (mostly credit cards) and A$9 billion of retail deposits.
NAB was selected following an exhaustive auction process to acquire Citi’s consumer business, which includes credit cards, loans, retail banking, mortgages and wealth management solutions for high-net-worth individuals (HNWI). The bank is also a credit card provider for BoQ, Coles, Kogan, PayPal, Qantas, Suncorp and Virgin Money.
While NAB’s credit card portfolio will nearly double to A$7.4 billion, the strategic value relates to the integration of Citi’s leading product development and marketing capability. Interestingly NAB is acquiring a closely aligned MasterCard credit card offering despite being a long term strategic partner of Visa for the last ten years,
There is no immediate change to the way Citi serves its consumer banking and wealth customers. Customers will be contacted in the coming months with more details. Citi Australia’s institutional business provides a range of investment and banking services to around 1,500 corporates, banks, governments and institutional investors in Australia, as well as clients offshore. Services include capital markets and corporate advisory, markets and securities services, commercial banking and treasury and trade solutions.
“This is a positive outcome for our clients, our colleagues and for Citi. As this transaction shows, we are moving forward with urgency as we refresh our strategy and execute the decisions we have already made as part of that effort. We are focusing our resources on businesses where we have scale and competitive advantages in order to deliver growth and improved returns over time” stated Citi CEO Jane Fraser.
“In addition to serving our wealth clients through four global hubs, we will continue to serve our institutional clients in Australia, as we have for nearly a century, and across the greater Asia-Pacific region. We are very pleased with the economics of the transaction and we will use the capital generated to invest in our strategic priorities, as well as to continue to return capital to our shareholders” Fraser added.
“Citigroup’s management team has 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” commented NAB CEO Ross McEwan.