C stock was one of just a few stocks that closed up on January 13, 2022. The upward is likely the result of a divesting of banks in four countries across Asia.
Citi Announces Agreement to Sell Consumer Bank in Indonesia, Malaysia, Thailand and Vietnam to UOB Group
On January 13, 2022, Citi announced it has reached an agreement with UOB Group (UOB) on the acquisition of Citi’s consumer banking franchises in Indonesia, Malaysia, Thailand, and Vietnam. The transaction includes retail banking and credit card businesses but excludes the bank’s institutional businesses in all four countries. Citi remains committed and focused on serving institutional clients in these countries locally, regionally and globally.
The agreement covers all related Citi staff, with approximately 5,000 consumer bank and supporting employees expected to transfer to UOB upon close of the proposed transaction. UOB will pay Citi cash consideration for the net assets of the acquired businesses, subject to customary closing adjustments, plus a premium of S$915 million [US$690 million].
Upon closing, Citi expects the transaction to result in the release of approximately US$1.2 billion of allocated tangible common equity, as well as an increase to tangible common equity of over US$200 million. As previously announced, Citi’s exit from its consumer franchises in 13 markets across Asia Pacific and EMEA is expected to release approximately US$7 billion of allocated tangible common equity over time.
Peter Babej, Citi Asia Pacific CEO, said, “We are excited to announce this transaction with UOB, a leading pan-Asian institution. We are confident that UOB, with its strong culture and broad regional ambitions, will provide excellent opportunities and a long-term home for our consumer banking colleagues in Indonesia, Malaysia, Thailand and Vietnam. Focusing our business through these actions will facilitate additional investment in our strategic focus areas, including our institutional network across Asia Pacific, driving optimal returns for Citi.”
Mark Mason, Citi CFO said, “The sale of these four consumer markets, along with our previously announced transactions, demonstrate our sense of urgency to execute our strategic refresh. We are committed to working in the best interests of our shareholders by focusing our resources on businesses that can deliver growth, as well as increasing the capital we return to shareholders over time.”
UOB was selected by Citi following an extensive and competitive auction process. Citi is committed to a seamless transaction, and during the transition to closing, there will be no change in service provided to our consumer banking and wealth customers. Completion of the divestitures in each country will not be conditional on the completion of the divestitures in the other countries but will be conditional on obtaining regulatory approvals relevant to each country. It is estimated that completion will take place between mid-2022 and early 2024, depending on the progress and outcome of the regulatory approval process.
Citi’s Banking, Capital Markets and Advisory Group is acting as exclusive financial advisor to Citi in respect of the transaction.
Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.
Banking Quarterly Reports Coming January 14, 2022
JPMorgan (JPM), Wells Fargo (WFC), and Citi (C) are scheduled to announce quarterly results on January 14, 2022.
Citi Selling Off Consumer Banks In Mexico
On January 12, 2022, JPMorgan analyst Vivek Juneja says Citigroup announced a surprising big shift yesterday as it intends to exit consumer, small business, and middle market banking in Mexico. The restructuring at Citi continues as it has for the past 15 years and it “continues to dismantle itself,” Juneja tells investors in a research note. The business exits will likely hurt Citi’s overall profitability, adds the analyst, who keeps a Neutral rating on the shares.
Citi announced that it intends to exit the consumer, small business and middle market banking operations of Citibanamex as part of its “Strategic Refresh”. Citi will continue to operate a locally-licensed banking business in Mexico through its global Institutional Clients Group. Citi has operated in Mexico for more than a century and the country will remain among Citi’s top institutional markets outside of the U.S. Citi will continue to invest in and grow those institutional banking operations, along with its Private Banking franchise.
📺 Citi CEO Jane Fraser on exiting 13 retail markets outside of U.S.
📈 Citi Stock Technical Analysis
The long-term trend is still neutral, but the short-term trend is positive, so the stock is getting more and more appreciated by traders and investors. C is currently trading in the middle of its 52-week range. The S&P500 Index however is trading in the upper part of its 52-week range, so C is lagging the market slightly.
There is support at 67.42 from a trend line in the daily time frame. There is a support zone ranging from 64.18 to 65.13. This zone is formed by a combination of multiple trend lines and important moving averages in multiple time frames.
There is resistance at 69.79 from a horizontal line in the daily time frame. There is also resistance at 73.11 from a horizontal line in the weekly time frame. Finally, there is a resistance zone ranging from 74.30 to 74.30. This zone is formed by a combination of multiple trend lines in the daily time frame.
C has an average technical rating and the quality of the presented setup is also not ideal at the moment. Price movement has been a little bit too volatile to find a nice entry and exit point. It is probably a good idea to wait for a consolidation first. Click here to sign up for email alerts on when Citi stock consolidates and is a better long entry.