Back to top

Image: Bigstock

Citigroup (C) to Vend Australian Consumer Business for $882M

Read MoreHide Full Article

In continuation with its efforts to boost returns by streamlining operations internationally, Citigroup Inc. (C - Free Report) has reportedly signed a deal to sell its Australian consumer business unit to National Australia Bank, in a deal worth $882.24 million.

The deal, subject to approval from competition regulator, comprises a A$4.3-billion unsecured lending portfolio, A$7.9 billion in residential mortgages, and nearly A$9 billion in deposits. As per the deal terms, 800 employees of Citigroup and senior management will join National Australia Bank. Citigroup’s institutional business and underlying technology or platforms do not form part of the deal.

Credit card payments in Australia have been dwindling since government pandemic cheques are being used to pay down debt. Even younger generations in the country prefer buy now pay later (BNPL) providers, such as Afterpay, in order to benefit from 'interest-free' instalments. Thus, Citigroup’s move to exit from the Australian market amid the presently-challenged credit-card business environment is a strategic fit.

This deal comes after the company announced major strategic action in April, whereby its Global Consumer Banking segment will exit 13 markets. With the move, Citigroup seeks to focus more on wealth division operations in Asia and EMEA — Singapore, Hong Kong, the UAE and London.

The sale, expected to close in March 2022, will also fortify National Australia Bank’s personal banking business as the lender contends for a larger share amongst Australia's "Big Four" banks, which jointly control more than 80% of the market. The Australian lender will expend A$165 million to establish a new unsecured lending platform for the whole business.

Citigroup's consumer business in Australia recorded lending assets worth A$12.2 billion and deposits worth A$9 billion at the end of June this year.

Citigroup will use the capital generated from the deal to invest in its strategic priorities, as well as continue to return capital to shareholders.

The company continues with its restructuring initiatives, while being focused on core urban markets, improving digital channels and reducing branches. It is also making investments in several areas to stoke growth. Management’s long-term strategy to increase the fee-based business mix and shrink its non-core assets also bodes well for long-term growth. We anticipate these streamlining initiatives will boost the company’s capital position, reduce expenses and drive operational efficiencies.

Citigroup currently carries a Zacks Rank #4 (Sell).

Shares of the bank have gained 11.7% over the last six months, underperforming 18.9% growth for the industry

Zacks Investment Research
Image Source: Zacks Investment Research

Stocks to Consider

Hanmi Financial Corporation (HAFC - Free Report) has been witnessing upward estimate revisions for the last 30 days. Over the past six months, the company’s share price has been up more than 23%. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here..

Evercore Inc (EVR - Free Report) has been recording upward estimate revisions for the last 30 days. Further, the stock has rallied more than 13.5% over the past six months. It currently carries a Zacks Rank #2 (Buy).

JMP Group LLC has been witnessing upward estimate revisions for the last 30 days. Also, the company’s shares have risen nearly 58% over the past six months. It holds a Zacks Rank #2, at present.

Unique Zacks Analysis of Your Chosen Ticker

Pick one free report - opportunity may be withdrawn at any time

Citigroup Inc. (C) - $25 value - yours FREE >>

Evercore Inc (EVR) - $25 value - yours FREE >>

Hanmi Financial Corporation (HAFC) - $25 value - yours FREE >>

Published in