DBS Bank Taiwan (星展台灣) is planning to purchase Citibank Taiwan Ltd’s (花旗台灣) consumer banking business for its net assets plus a premium of NT$19.8 billion (US$711.51 million) in cash, the local unit of Singapore-based DBS Group Holdings Ltd said yesterday.
It would acquire the consumer banking business via a transfer of assets and liabilities, DBS Taiwan general manger Lim Him-chuan (林鑫川) told a news conference in Taipei.
With a capital injection of S$2.2 billion (US$1.6 billion) from the parent company, DBS Bank Taiwan would pay Citibank NT$19.8 billion as a premium and acquire Citibank Taiwan’s net assets, for which the price has not yet been determined, Lim said.
Photo: Ann Wang/ Reuters
It would also use part of the fresh capital to boost its capital adequacy above the regulatory requirements, as it would need more reserves after absorbing more risk-weighted assets from the Citibank unit, DBS Bank Taiwan said.
The acquisition is expected to be completed in the middle of next year, as it is subject to approval by the Financial Supervisory Commission and the Investment Commission, it said.
Before that, Citibank Taiwan would continue operating its retail banking business, which includes credit cards, mortgages and unsecured loans, it said, adding that there would be no immediate changes to Citibank customer services.
“The acquisition is expected to help accelerate our growth over at least 10 years. Not only will we obtain high-quality customers and top-class managers, but we will also become Taiwan’s largest foreign bank in terms of assets,” Lim said.
DBS Taiwan would have the largest credit card business, assets under management, loan book and deposit base among all foreign banks in the nation, he said, adding that Citi’s low-cost deposits would support the expansion of DBS Taiwan’s institutional and small and medium-sized firm-focused banking business.
Asked what gave DBS Taiwan an advantage over other local banks bidding for the Citibank unit, Lim said that DBS and Citi largely share the same corporate culture, as many top managers had joined DBS from Citi.
“The acquisitions we have made since the start of the [COVID-19] pandemic have given us a platform to build meaningful scale in some of our core markets. This acquisition is no exception,” DBS Group chief executive officer Piyush Gupta said.
Citibank’s consumer business is expected to contribute at least S$250 million annually in net profit after the projected recovery from COVID-19, Gupta added.
“This acquisition marks another significant milestone in DBS’ commitment to the Taiwan market,” Lim said.
All 3,500 employees of the consumer unit would keep their jobs, with their salaries unaffected for the next three years, Lim said.
“DBS Taiwan was selected by Citi following an extensive and competitive auction process. Citi is committed to a seamless transaction... This transaction represents a positive outcome for our clients, our colleagues and our firm,” Citibank Taiwan chairman Paulus Mok (莫兆鴻) said in a statement.
Once the acquisition is approved and completed, the 2.8 million credit cards issued by Citibank Taiwan would need to be renamed, but DBS Taiwan would not change the cards’ reward conditions and might even improve them, DBS consumer banking managing director Seraph Sun (孫可基) said.
Preliminary analyses showed that DBS Taiwan’s credit card holder did not significantly overlap with those of Citibank Taiwan, it said.
DBS Taiwan would evaluate ways to integrate its bank branches with Citibank’s 45 local branches without affecting consumers’ rights, Lim said.
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