* DBS to pay $707 million for Citi's Taiwan consumer
* Transaction will make DBS biggest foreign bank in Taiwan
* DBS will take on 3,500 staff under the deal
* DBS CEO pushes group strategy to expand in key markets
SINGAPORE, Jan 28 (Reuters) - DBS Group has agreed
to pay S$956 million ($706.6 million) for Citigroup's
consumer business in Taiwan, making the Singapore lender the
largest foreign bank in Taiwan by assets as it shores up
regional acquisitions to power growth.
The deal is part of DBS Chief Executive Piyush Gupta's
strategy of expanding Southeast Asia's largest bank in overseas
markets, having bought an $814 million minority stake in a
privately owned Chinese bank last year as well as distressed
lender Lakshmi Vilas Bank in India.
The Taiwan transaction will help DBS better compete with
bigger local rivals including CTBC Financial Holding Co Ltd
and Cathay Financial Holding Co. Ltd. in the
The transaction comes after Citi said it would exit retail
operations in 10 markets in Asia as it refocuses on its more
lucrative institutional and wealth management businesses. Citi
is retaining its institutional business in Taiwan.
"Citi Consumer Taiwan is a highly attractive, high-returns
business that is expected to contribute at least S$250 million
annually in net profit to DBS after the COVID-19 recovery,"
Gupta told a news conference on Friday.
The performance of Citi's unit weakened in the past two
years mainly because of a sharp drop in interest rates that
impacted the sector.
"Frankly, given the outlook on rates that we have today,
this is something that's going to come roaring right back. I
wouldn't be surprised if this turns around even in the course of
this calendar year," Gupta said.
DBS, which makes the majority of its profit from Singapore,
will take on about 3,500 staff from Citi's Taiwanese business
which has 2.7 million credit cards, 500,000 deposit and wealth
customers and 45 branches.
Gupta said the deal will accelerate DBS Taiwan's growth by
more than 10 years in a market that is attractive for its wealth
and technology sectors.
DBS will pay a premium of S$956 million for Citi's net
assets and this will be adjusted when the deal is expected to
close in mid-2023. DBS will also inject S$1.2 billion as
Since Citi's Taiwan business had gross loans of S$11.3
billion and total deposits of S$15.1 billion, DBS is effectively
not paying anything based for the net assets.
DBS said the acquisition, funded by its excess capital, will
have no impact on its ability to pay dividends. DBS, which has a
market value of nearly S$92 billion, reported a net profit of
S$1.7 billion for the July to September quarter.
Citing sources, Reuters had reported late on Thursday that
DBS would announce the purchase on Friday.
Morgan Stanley is DBS's financial adviser on the
Peter Babej, Citi's Asia Pacific CEO, said the transaction
will enable Citi to make additional investments in strategic
areas, including its institutional businesses in Taiwan, which
remains a priority market for the firm.
Earlier this month, Citi sold its consumer business in four
Southeast Asian markets to Singapore's United Overseas Bank
for about S$5 billion.
($1 = 1.3529 Singapore dollars)
(Reporting by Anshuman Daga and Indranil Sarkar; Editing by