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Citigroup (C) Closes Australian Consumer Business Sale to NAB
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Citigroup Inc. (C - Free Report) has completed the previously announced sale of its Australian consumer business to National Australia Bank Limited (“NAB”). The sale was announced in August last year and it marks the completion of the first among 14 consumer market exits as part of the bank’s global strategy refresh.
The sale includes unsecured lending, residential mortgages, deposits and wealth. Also, 800 Citigroup employees are being transferred to NAB.
Citigroup will release around $800 million of allocated tangible common equity as a result of the sale.
The company had recorded a loss on sale of the business in Other revenues primarily due to a currency translation adjustment (CTA) loss. As of first-quarter 2022, the bank reported a cumulative pre-tax loss on sale of approximately $815 million ($680 million on an after-tax basis).
This mainly indicates the negative impacts of a pre-tax $625-million CTA loss or $475 million on an after-tax basis. This is reflected in the Accumulated Other Comprehensive Income (AOCI) component of equity. Hence, as the CTA-related balance will be removed from AOCI due to the sale, the company is likely to witness an improvement in its Common Equity Tier 1 Capital in second-quarter 2022.
Including the sale, Citigroup has inked deals for the divesture of nine markets and is gradually winding down its consumer banking business in South Korea. Such exits will free up capital and help the company pursue investments in wealth management operations in Singapore, Hong Kong, the UAE and London to stoke growth.
Citigroup anticipates the release of $12 billion (in aggregate) of allocated tangible common equity over time from such market exits. These efforts will likely augment its profitability and efficiency over the long term.
Management Comments
Citigroup Australia CEO, Marc Luet, remarked, "We're delighted to have partnered with NAB on the transaction which is a very positive outcome for our customers and our consumer bank colleagues. Citi Australia will now focus its resources on the businesses where we have scale in order to deliver growth and improved returns. Our goal is to be Australia and New Zealand's preeminent banking partner for corporate, investor and public sector clients with cross-border needs."
Citigroup's CEO of Legacy Franchises, Titi Cole, said, "The sale marks an important milestone as the first of our completed divestitures. NAB is the optimal owner for this business and I wish our former employees and customers the best in their new environment."
Shares of the bank have lost 17.9% over the last six months, underperforming the 13.6% decline of the industry.
Image Source: Zacks Investment Research
Inorganic Growth Efforts by Other Firms
With a view to helping its clients build long-term financial wellness, Truist Financial Corporation (TFC - Free Report) acquired the award-winning gamified finance mobile app, Long Game. Long Game changes the way people engage with their banks. The mobile finance app uses prize-linked savings and casual gaming to motivate smart financial behavior.
Truist Financial is expected to use Long Game’s innovative technology to inspire and build better lives and communities.
Progressing with its merger, First Horizon Corporation (FHN - Free Report) recently announced that its shareholders gave the nod to be acquired by Canada-based The Toronto-Dominion Bank (TD - Free Report) .
The transaction was announced in first-quarter 2022. It is expected to close in the first quarter of TD's fiscal 2023.
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Citigroup (C) Closes Australian Consumer Business Sale to NAB
Citigroup Inc. (C - Free Report) has completed the previously announced sale of its Australian consumer business to National Australia Bank Limited (“NAB”). The sale was announced in August last year and it marks the completion of the first among 14 consumer market exits as part of the bank’s global strategy refresh.
The sale includes unsecured lending, residential mortgages, deposits and wealth. Also, 800 Citigroup employees are being transferred to NAB.
Citigroup will release around $800 million of allocated tangible common equity as a result of the sale.
The company had recorded a loss on sale of the business in Other revenues primarily due to a currency translation adjustment (CTA) loss. As of first-quarter 2022, the bank reported a cumulative pre-tax loss on sale of approximately $815 million ($680 million on an after-tax basis).
This mainly indicates the negative impacts of a pre-tax $625-million CTA loss or $475 million on an after-tax basis. This is reflected in the Accumulated Other Comprehensive Income (AOCI) component of equity. Hence, as the CTA-related balance will be removed from AOCI due to the sale, the company is likely to witness an improvement in its Common Equity Tier 1 Capital in second-quarter 2022.
Including the sale, Citigroup has inked deals for the divesture of nine markets and is gradually winding down its consumer banking business in South Korea. Such exits will free up capital and help the company pursue investments in wealth management operations in Singapore, Hong Kong, the UAE and London to stoke growth.
Citigroup anticipates the release of $12 billion (in aggregate) of allocated tangible common equity over time from such market exits. These efforts will likely augment its profitability and efficiency over the long term.
Management Comments
Citigroup Australia CEO, Marc Luet, remarked, "We're delighted to have partnered with NAB on the transaction which is a very positive outcome for our customers and our consumer bank colleagues. Citi Australia will now focus its resources on the businesses where we have scale in order to deliver growth and improved returns. Our goal is to be Australia and New Zealand's preeminent banking partner for corporate, investor and public sector clients with cross-border needs."
Citigroup's CEO of Legacy Franchises, Titi Cole, said, "The sale marks an important milestone as the first of our completed divestitures. NAB is the optimal owner for this business and I wish our former employees and customers the best in their new environment."
Citigroup currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of the bank have lost 17.9% over the last six months, underperforming the 13.6% decline of the industry.
Image Source: Zacks Investment Research
Inorganic Growth Efforts by Other Firms
With a view to helping its clients build long-term financial wellness, Truist Financial Corporation (TFC - Free Report) acquired the award-winning gamified finance mobile app, Long Game. Long Game changes the way people engage with their banks. The mobile finance app uses prize-linked savings and casual gaming to motivate smart financial behavior.
Truist Financial is expected to use Long Game’s innovative technology to inspire and build better lives and communities.
Progressing with its merger, First Horizon Corporation (FHN - Free Report) recently announced that its shareholders gave the nod to be acquired by Canada-based The Toronto-Dominion Bank (TD - Free Report) .
The transaction was announced in first-quarter 2022. It is expected to close in the first quarter of TD's fiscal 2023.