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Citigroup (C) to Sell off Bahrain Consumer Banking Franchise

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As part of its efforts to pivot away from the global consumer banking business, Citigroup Inc. (C - Free Report) will sell its Bahrain consumer banking business to Ahli United Bank B.S.C. (“AUB”). The deal includes C’s retail banking, credit card and unsecured lending businesses but excludes institutional businesses.

The transaction is subject to regulatory approvals and is anticipated to close by the second half of 2022. At the closing, the sale is expected to account for a marginal portion of the previously announced release of around $7 billion of allocated tangible common equity over time from the exit of Citigroup’s consumer franchises in 13 markets in the Asia Pacific, and Europe, Middle East and Africa.

Citigroup management noted, "We are very pleased to announce this transaction with AUB, a leading organization with a strong growth strategy in consumer banking in Bahrain. We are confident AUB will provide excellent opportunities for our customers and employees. For Citi, this transaction will enable additional investment in our strategic focus areas, including our institutional businesses in Bahrain."

Notably, the sale marks the ninth of the 13 announced dispositions by the big bank in the Asia Pacific and the Europe, Middle East and Africa region.

Last week, Citigroupannounced that it reached an agreement with Axis Bank Limited to sell its consumer businesses in India.Other than India, the company signed deals to sell consumer businesses in Australia, Indonesia, Malaysia, Philippines, Thailand, Vietnam and Taiwan. It also plans to gradually wind down its consumer banking business in South Korea.

In January 2022, the company revealed plans to exit the consumer, small business and middle-market banking operations in Mexico. Such exits will free up capital and help it pursue investments in wealth management operations in Singapore, Hong Kong, the UAE and London to stoke growth. These efforts will likely help augment its profitability and efficiency over the long term.

However, Citigroup has been revamping its underlying technology, risk management and internal controls as part of the remediation highlighted by the Office of the Comptroller of the Currency and the Federal Reserve. This, along with higher spending on compensation, technology, front-office expansion and Asia divestitures, might inflate expenses and hamper bottom-line growth.

Shares of this Zacks Rank #3 (Hold) company have lost 27.1% in the past six months, underperforming the industry’s fall of 11.4%.


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Inorganic Moves by Other Companies

Royal Bank of Canada (RY - Free Report) recently announced its acquisition of U.K.-based Brewin Dolphin Holdings PLC for C$2.6 billion (US$2.1 billion). The transaction, subject to shareholders’ approval and receipt of all regulatory consents, is anticipated to close by the end of third-quarter 2022.

The acquisition will help Royal Bank of Canada’s growth in the U.K. market, making its wealth management business the third-largest in the U.K. and Ireland. RY is already a market leader in Canada.

Valley National Bancorp (VLY - Free Report) completed the previously announced acquisition of Bank Leumi Le-Israel B.M.’s U.S. banking arm, Bank Leumi USA. The deal, announced in September 2021, will broaden Valley National’s commercial product offerings, and expand its technology and venture capital banking business.

Therefore, it will solidify VLY’s position as a top-tier, relationship-focused commercial bank. The pro-forma company, formed as a result of the merger, is the 29th largest publicly traded U.S. bank by assets.

Continuing with its growth efforts, Nicolet Bankshares, Inc. entered an agreement to acquire Charter Bankshares, Inc. and its wholly-owned subsidiary, Charter Bank. Subject to regulatory approvals and other customary closing conditions, the deal is expected to close in third-quarter 2022.

The deal is valued at $158 million. Per the terms of the merger, shareholders of Charter will get 1.26 million shares of Nicolet common stock and $38.8 million in cash.

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