Sale of Citi’s PH retail banking business on track – Manila Newsletter
The sale of Citi Philippines’ retail and consumer assets is on track, and bank officials have said they are happy with the list of major local banks they are in talks with for a takeover.
James Griffiths, media relations manager for Citi Asia-Pacific, said the US lender was happy with the list of potential buyers from the Philippines.
“We are going to choose the bank that best meets our expectations, our employees and our customers. There was a lot of speculation locally about which bank made a bid for the assets and there was a wide range of buyers. But we’ll pick the buyer who makes the most sense to move our business forward in the best way, ”Griffiths said in a virtual press chat on Tuesday, November 23.
Citi is expected to announce in the first half of 2022 which banks that have reportedly offered to buy the assets such as BDO Unibank Inc., Metropolitan Bank & Trust Co. and Bank of the Philippine Islands, will resume retail operations. .
“We wouldn’t want to put a specific time (to close the sale). We said in April that we plan to complete this or get an announced deal by the second quarter of 2022. As for us (in terms of) timing, we’re on the right track, ”Griffiths said. . . Citigroup sells its business assets in the Philippines, Indonesia, Thailand, Taiwan and India. Interested banks submitted firm offers in October.
The US bank expects 2022 to be busy in terms of mergers and acquisitions (M&A), consolidations and business expansions.
Citi officials have said there will be a trend towards mergers and acquisitions – not just theirs – as they see companies not only going into mergers and acquisitions, but also choosing spin-offs as a post-pandemic strategy. .
Citi chief executive Jan Metzger, also responsible for banking and capital markets in Asia-Pacific, said mergers and acquisitions and consolidation, especially in the tech sector, will continue to grow next year. He expects more non-tech companies to buy tech-focused companies.
He also sees spinoff companies becoming more attractive as companies “separate parts of their businesses that are growing at different rates for various strategic reasons.” This is an opportunity for multinational and local companies to capitalize on more local investments and other sources of finance.
Merchant bank manager Fernando Fleury said cross-border mergers and acquisitions are also an area that local businesses are paying more attention to. He noted that more multinationals are potentially buying targets in the Philippines and some of the domestic companies are moving overseas.
Fleury also said that Citi was currently in discussions with Filipino “truly global companies”. “We have several discussions with them about their expansion plans for Southeast Asia in particular,” he said. “We are seeing more and more Filipino companies moving overseas and trying to take advantage of other major markets in the region,” he added.
Local banks, in general, are liquid and “asset hungry,” Fleury said. For Citi, he expects continued credit growth, particularly from institutional clients. In 2021, Citi through its Citicorp Capital Philippines raised $ 10 billion in the fixed income market to fund its clients.
Even as it shifts away from its consumer and retail businesses, Citi has grown its local operations and niche market. “We have hired and grown our talent base in the country to support the growth of our clients,” he said. These target markets include corporate banking, multinational companies, financial institutions, the public sector and local businesses.
“It’s going to be a busy year (2022),” Fleury said. The bank’s financial institution business, for example, has “enormous potential” due to the new digital banking sector in the country. It’s a whole new industry within the group of financial institutions, he said. Another area the bank is focusing on is digital infrastructure, including building towers, data centers and fiber networks.
“We are very, very optimistic and positive about the Philippines,” Fleury added.
Citi predicts 6.3% GDP growth in the fourth quarter for the local economy, which would translate into a projected 5% full-year GDP growth by the end of 2021. For next year, local GDP could grow 6.8 percent, just short of the government’s target of 7 to 9 percent.
In the meantime, Citi believes inflation will still exceed the central bank’s target of 2-4% to 4.3% this year, but will drop to 2.7% in 2022. They expect that. that inflation falls below 4% this month, which would allow Bangko Sentral ng Philippines to “keep the key rate unchanged well after mid-2022”.
The peso against the US dollar is expected to remain stable at 49.80 pesos by the end of 2021, but will depreciate to 51.30 pesos next year as global interest rates rise, including included in the Philippines.
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