SINGAPORE — DBS Group has agreed to pay S$956 million ($706.6 million) to buy Citigroup’s consumer business in Taiwan, making the Singapore lender the largest foreign bank in Taiwan by assets as it bulks up regional acquisitions to power growth.
The deal is part of DBS Chief Executive Piyush Gupta’s strategy of expanding Southeast Asia’s largest bank in overseas markets, having bought an $814 million minority stake in a privately owned Chinese bank last year as well as distressed lender Lakshmi Vilas Bank in India.
“The acquisitions we have made since the start of the pandemic have given us a platform to build meaningful scale in some of our core markets. This acquisition is no exception,” Gupta said in a statement on Friday.
The transaction comes after Citi announced last year that it would exit retail operations in 10 markets in Asia as it refocuses on its more lucrative institutional and wealth management businesses.
DBS, which makes the majority of its profit from Singapore, said it will take on about 3,500 staff from Citi’s Taiwanese business which has 2.7 million credit cards, 500,000 deposit and wealth customers and 45 branches.
Gupta said Citi’s Taiwan consumer business was a “highly attractive, high-returns business” that DBS expects to contribute at least S$250 million annually in net profit after COVID-19 recovery.
DBS said it will pay cash for the net assets of Citi’s consumer business in Taiwan plus a premium of S$956 million, that will be adjusted when the deal is expected to close in mid-2023. DBS will also inject S$1.2 billion as capital.
Citi’s Taiwan business included gross loans of S$11.3 billion and total deposits of S$15.1 billion, DBS said
DBS said the acquisition, funded by its excess capital, will have no impact on its ability to pay dividends.
Morgan Stanley is the financial adviser to DBS on the transaction.
Citing sources, Reuters had reported late on Thursday that DBS would announce the purchase on Friday.
Earlier this month, Citi struck a deal to sell its consumer business in four Southeast Asian markets to Singapore’s United Overseas Bank for about S$5 billion. ($1 = 1.3529 Singapore dollars) (Reporting by Anshuman Daga and Indranil Sarkar; Editing by Christopher Cushing)