Asia consumer business: DBS, StanChart weigh bids as Citi retreats

21 Apr, 2021

SINGAPORE: Banks including DBS Group, Mitsubishi UFJ Financial Group (MUFG), OCBC and Standard Chartered are set to bid for parts of Citigroup's consumer business in Asia, people with direct knowledge of the matter said. The sale process will start within a couple of weeks, they added, declining to be named as they were not authorised to speak to media. The move comes after Citi said it would exit from its consumer franchises in 13 markets, 10 of which are in Asia, as it refocuses on its more lucrative institutional and wealth management businesses in these markets.

Potential bids from the regional banks and StanChart, which makes most of its profit in Asia, underscores their growing appetite for businesses like credit cards and mortgages in a push to lock in long-term income growth.

The businesses Citi is exiting had $82 billion in assets and were allocated $7 billion in tangible common equity last year. Citi has plans to reposition its Asian consumer banking business from its "wealth centres" of Hong Kong and Singapore.

As Citi is not giving up its banking licences in most of the markets it is exiting, the sale of the consumer banking portfolios and branches will only appeal to lenders with existing presence in these countries, the people said.

"Asia is critical to our firm's strategy, and we will allocate resources to drive profitable growth," a Citi spokesman in Hong Kong said, declining to comment on the sale process.

Representatives at Japanese lender MUFG and StanChart, and Sumitomo Mitsui Financial Group, which the sources said was another potential bidder, declined to comment. "DBS has always been open to exploring sensible bolt-on opportunities in markets where we have a consumer banking franchise (China, India, Indonesia and Taiwan) and where we can overlay our digital capabilities," Southeast Asia's biggest lender said in a statement.

In 2016, DBS bought ANZ's wealth management and retail businesses in five Asian markets for about $80 million. Citi's sprawling India consumer business, comprising retail deposits, mortgages and credit cards, and its Taiwan business would be among the most valuable parts of its Asian consumer portfolio, the sources said.

Citi's consumer banking business in the 13 markets accounted for $4.2 billion of the bank's $74.3 billion revenue in 2020. All the markets it is exiting made a combined loss of $40 million in the consumer banking business in the same year. DBS, the only big foreign bank with a fully owned Indian subsidiary, is eyeing Citi's India business, which is also set to attract StanChart and local lenders Kotak Mahindra Bank and Axis Bank, the sources said.

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