Aboitiz-led Union Bank of the Philippines’ planned acquisition of American banking giant Citigroup Inc.’s consumer banking business in the country has secured the go signal from the Philippine Competition Commission (PCC).
In a statement on Friday, the antitrust watchdog said it approved the proposed takeover by UnionBank of Citibank, N.A. Philippine Branch (Citibank PH), Citicorp Financial Services & Insurance Brokerage Philippines Inc. (Citicorp), and Citibank Square Building in an April 5, 2022 decision.
In its decision, the PCC said that it found the proposed acquisition did “not result in substantial lessening of competition in each of the segments of the consumer banking markets. This is due to substantial competitive constraints exerted by other banking institutions nationwide.”
In December last year, UnionBank announced it entered into a Share and Business Transfer Agreement with various subsidiaries of Citigroup Inc. (Citi) to acquire the American lender’s consumer banking business in the Philippines.
The transaction covers Citi’s local credit card, unsecured lending, deposit and investment businesses, as well as Citicorp Financial Services and Insurance Brokerage Philippines Inc. (CFSI), which provides insurance and investment products and services to retail customers.
The deal also covers all related Citi staff, with approximately 1,750 consumer bank and supporting employees expected to transfer to UnionBank upon close of the transaction.
UnionBank will also acquire Citi’s real estate interests, such as the Citibank Square in Eastwood, three full-service bank branches, five wealth centers, and two bank branch lites.
“Upon review of the findings and recommendation of the Mergers and Acquisitions Office and the Parties’ submissions, the Commission finds that the acquisition by UnionBank of assets of Citibank PH and Citi Square and shares in Citicorp will not likely result in substantial lessening of competition,” the PCC decision read.
“Post-transaction, significant competitive pressures or constraints remain from other banking institutions in the markets for credit card issuance, retail deposits, asset management, and unsecured loans; and no horizontal or vertical overlaps exist in the market for real estate leasing of commercial spaces in Manila, Quezon City, and Pasig,” the antitrust watchdog said.
The Aboitiz-led bank earlier said it would pay a cash consideration for the net assets of the Citi Philippines’s consumer business, subject to customary closing adjustments, plus a premium of P45.3 billion.
The transaction stemmed from Citi’s announcement in April 2021 of its plan to close its consumer banking operations in 13 countries, including the Philippines.
The PCC said the acquisition was the 204th transaction cleared by the agency to date.
It was also the first for 2022 following the implementation of a P50-billion merger review threshold through Bayanihan 2.
As the country’s antitrust authority, PCC is mandated under the Philippine Competition Act to review mergers, acquisitions, and joint ventures of firms across all sectors that meet the threshold to ensure that these deals do not harm the interest of consumers. — DVM, GMA News