DBS buys Citi’s consumer crown jewel in Taiwan
Of all the 13 consumer businesses on the block in Citi’s Asia revamp, Taiwan was the most prized. DBS’s successful bid bolsters an already profitable business – and doing so required some hard thinking about geopolitics by the Singapore bank’s board.
DBS is to buy Citi’s consumer operations in Taiwan in a deal which strengthens the Singaporean bank’s hand in a lucrative market. The sale is also a crucial step in Citi’s efforts to divest consumer businesses across Asia and EMEA.
The transaction’s cost is difficult to pin down. Both sides agree the premium being paid over the net asset value is NT$19.8 billion ($715 million, or S$956 million), but the cash consideration for the NAV will not be clear until the deal closes in mid 2023. DBS has said it will make a S$2.2 billion capital injection into its DBS Taiwan business, of which S$1.2 billion is “to support incremental RWA [risk-weighted asset] and capital needs.”
The deal includes Citi’s retail banking, credit card, mortgage and unsecured lending businesses, but not the institutional business, which the US house is committed to maintaining.
Citi’s Taiwan business is seen as one of the consumer bank’s best assets in the region. DBS chief executive Piyush Gupta, a former employee of Citi, recalls it fondly.