UPDATE: DBS to acquire Citi’s consumer assets in Taiwan

DBS Bank branchDBS Bank branch

This item was originally published on Friday, 28 January 2022 at 10:25 a.m. SGT; it has since been updated with more details.

DBS Bank has agreed to acquire Citigroup’s consumer banking business in Taiwan, paying cash for the net assets plus an additional S$956 million, or around NTD19.8 billion, Southeast Asia’s largest bank said in a filing to SGX Friday. 

“Citi Consumer Taiwan is a highly attractive, high-returns business that is expected to contribute at least S$250 million annually in net profit to DBS after Covid-19 recovery. Post-transaction, DBS Taiwan will be propelled to the top ranks of Taiwan’s banking sector,” Piyush Gupta, CEO of DBS Group, said in the statement.

Citi Consumer Taiwan currently has around 2.7 million credit cards and unsecured accounts, around 500,000 deposit and wealth customers and 45 branches, the filing said.

The operations had gross loans of S$11.3 billion, investment assets under management (AUM) of S$9 billion and total deposits of S$15.1 billion, with more than 70 percent sticky low-cost deposits, the filing said.

Citi Consumer Taiwan generated annual net profit of around S$250 million on average in the two years before the Covid-19 pandemic, the filing said, although it noted that 2020 net profit fell to S$158 million.

In Taiwan, DBS has 35 branches and an institutional, SME and consumer banking franchise, and is a “meaningful contributor,” the bank said.

DBS Taiwan posted S$140 million in profit before tax for 2020. 

Scaling up operations in Taiwan

The Singapore bank said acquiring Citi Consumer Taiwan would scale up its operations in an attractive market for the wealth and technology sectors. 

“DBS will be acquiring a high-quality customer base, along with a top-class management team and productive workforce,” the bank said. “The acquisition is expected to be accretive to earnings and return on equity immediately after completion.”

The acquisition will accelerate the Singapore bank’s growth in Taiwan by around 10 years, making it the largest foreign bank by assets in the market, with the largest credit cards balance, investment AUM, loan book and deposit base among the foreign banks, DBS said. 

The deal is expected to boost DBS Taiwan’s credit care and unsecured loan business by 4.7 times, and its assets under management by 3.5 times, the filing said.

DBS said it plans to make employment offers to all of Citi Consumer Taiwan’s 3,500 employees.

The deal is expected to be completed in around 18 months, or by the middle of 2023, DBS said.

In its first quarter results released in April 2021, Citigroup said it planned to focus in Asia and EMEA (Europe, Middle East and Africa) on four wealth centers — Singapore, Hong Kong, the UAE and London, and to seek exits from consumer franchises in 14 markets across those regions.

In mid-January, UOB announced it was acquiring Citigroup’s consumer banking business in Indonesia, Malaysia, Thailand and Vietnam in a nearly S$5 billion deal.