National Australia Bank Limited (NAB) today announced it has entered into a Sale and Purchase Agreement with Citigroup Pty Limited (Citigroup) to purchase Citigroup’s Australian consumer business (Citigroup Consumer Business) (the Proposed Acquisition).
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The Proposed Acquisition, which remains subject to regulatory approvals, is structured primarily as an asset and liability transfer, with NAB to pay Citigroup cash for the net assets of the Citigroup Consumer Business plus a premium of $250 million.
NAB CEO, Ross McEwan, said the proposed acquisition supported NAB’s strategic growth ambition for its Personal Banking business.
“The proposed acquisition of the Citigroup Consumer Business brings scale and deep expertise in unsecured lending, particularly credit cards, which continue to be an important way for customers to make payments and manage their cashflows,†he said.
“The cards and payments sector is rapidly evolving and access to a greater share of payments and transaction data will help drive product and service innovation across our Personal Banking business and deliver market leading customer experiences.
“Citigroup’s management team has also built strong white label partnerships with household names in the airline, retail and financial services sectors over many years. This expertise, together with our commitment to deliver market leading products and services, provides an opportunity to grow with existing partners and add new partners.â€
The Proposed Acquisition includes a home lending portfolio, unsecured lending business (operating under the Citigroup brand as well as white label partner brands)[1], retail deposits business, and private wealth management business[2].
As at 30 June 2021, the Citigroup Consumer Business had lending assets of approximately $12.2 billion (comprising residential mortgages of approximately $7.9 billion and unsecured lending of approximately $4.3 billion), and deposits of approximately $9.0 billion.
NAB will not be acquiring all of the technology systems or platforms that currently service these portfolios. NAB will enter into a Transitional Services Agreement (TSA) with Citigroup to assist with the integration of the Citigroup business into NAB. The TSA is expected to be in place for approximately 30 months. During this period, NAB will invest in a new technology platform to support the combined unsecured lending business.
As part of the Proposed Acquisition, senior management and approximately 800 Citigroup employees in total are expected to join NAB.
Citigroup’s institutional business in Australia is not included in the Proposed Acquisition. ■