Happy New Year.
Make way for UnionBank of the Philippines. With Edwin Bautista, 60 as president and CEO, UB is the hottest bank.
UB has made the strategic game-changing moves that will be make the bank of the Aboitiz family (49.27 percent), Insular Life (16.20 percent), and the Social Security System (15.29 percent) the financial behemoth to reckon with for many years to come.
With a 25 percent stock dividend, UB shares have risen from a low of P67.20 on March 18, 2021, to a high of P118 on Dec. 22, 2021, an appreciation of 76 percent. Plus the 25 percent stock dividend last month, the rise is effectively 101 percent. UB is the only listed bank to double in share price. Other banks managed 16 percent gain, at best.
UB is the only private commercial bank to be awarded a Digital Bank license. The central bank has stopped issuing more digital banking licenses. UB’s digital bank, UnionDigital, will be launched in 2022.
UnionBank is the seventh largest publicly-listed bank in the Philippines and widely recognized to be the leading digitally transformed and most innovative bank.
Over the years, UB has won coveted awards – best Digital Bank, best Retail Bank, Digital Banker of the Year, Best CEO Banker, Best SME Bank, Best in Sustainable Banking, Model Bank for Financial Inclusion, and Employer of the Year. The awards have come repeatedly, often in three years in succession.
On Dec. 23, 2021, UnionBank announced it would acquire Citigroup, Inc. or Citi’s banking business and subsidiaries in the Philippines. This is not an ordinary acquisition. UB pays P55 billion. UB beats six to 12 other big bank buyers.
With P55 billion, UB acquires P89.5 billion worth of consumer banking business (including loans of P59.7 billion), deposits of P70 billion, investment AUM (assets under management) of P95.0 billion, and over one million customers, many high-end and loaded with cash and Citi card bearing. Citi has 75,000 premium depositors under Citigold.
UnionBank will pay cash for the net assets of the Citi Philippines consumer business, plus a premium of P45.3 billion.
Sources said UB did not offer the highest price for the Citi business. But Citi considered the welfare of its customers and people and went for UB. UB’s digital transformation has been a compelling story, one reason why UB will take care of Citi’s business Citi had lovingly built.
Based on the anticipated increase in risk-weighted assets, the required equity is approximately P9.7 billion as of June 30, 2021. The acquisition is expected to be financed via a combination of internal resources and a stock rights offering (SRO).
UB’s key shareholders – Aboitiz Equity Ventures, Insular Life Assurance, and Social Security System – are fully committed to the SRO.
Citi is a venerable Philippine bank. It was established in 1902 as Citibank and went on to become the largest foreign commercial bank in the Philippines in assets, revenues, and profits.
With corporate banking, treasury, transactional banking and consumer banking services, Citi has trained many, if not most of the CEOs of local banks, including Union Bank President Edwin Bautista and Vice Chairman Justo A. Ortiz.
Four ex-Citibankers are in the Union board: Justo Ortiz, Bautista, Nina Aguas, and Ana Aboitiz-Delgado. Bautista, the affable UB CEO, spent seven years in Citi. He was country head for transaction banking. A marketing whiz kid, Edwin honed his skills as a brand manager at P&G.
UnionBank’s purchase includes Citi’s credit card, personal loans, wealth management, and retail deposit businesses. The acquisition also includes Citi’s real estate interests in relation to Citibank Square in Eastwood, three full service bank branches, five wealth centers, and two bank branch lites.
Erramon Isidro M. Aboitiz, UB chairman, said, “This acquisition further cements our position as a leading bank in the Philippines, as well as fast-tracks our growth aspirations in the retail banking segment.”
Gushed UnionBank President and CEO Bautista: “Citibank Philippines has a great, profitable and well-run retail portfolio. It has the third largest credit card franchise and is a pre-eminent wealth management provider in the Philippines. We look forward to this game- changing opportunity to leapfrog our credit card business and significantly expand our banking business in the higher end segment of the consumer market.”
Bautista added, “There are clear synergistic opportunities in this engagement. We intend to learn from Citi’s expertise to enable Union Bank to effectively build on its success and take the business to the next level. As we embark on this journey, we are committed to retain all of Citi’s key talents and uphold the superior customer experience that Citi has delivered to its customers over the years.”
Approximately 1,750 Citi employees, including senior management, are expected to join UnionBank. Mr. Aboitiz added, “We are looking forward to welcoming all employees to the UnionBank family. With the strong cultural similarities between the organizations, we believe Citi’s employees will feel at home at UnionBank.”
Citi sees no immediate changes in the way it serves its customers.
“With our current momentum and the reopening of the economy, we are confident that the worst of the pandemic is behind us. We will be entering 2022 with a solid base from where we can resume our pre-pandemic growth trajectories,” said President-CEO Edwin R. Bautista.
The transaction will be effected via (i) an asset and liability transfer of the consumer banking activities of Citibank, N.A., Philippines Branch, (ii) the sale of the shares in Citicorp Financial Services and Insurance Brokerage Philippines, Inc., and (iii) and the sale of Citibank Square building.
UnionBank’s net income for the first nine months of the year grew by 26 percent year-on-year (YoY) to P10.7 billion on account of a 9 percent increase in revenues. Return on equity is 13.6 percent.
As of end-September 2021, UB assets stood at P767.8 billion while total loans were at P341.5 billion.
Total CASA deposits sustained its record growth of 26 percent to P318.3 billion.
Digital onboarding initiatives continued to gain traction.
UB now has 3.6 million registered users across our digital platforms as of end-September 2021, 2.4x higher than the same period last year.
UBX also ramped up onboarding of customers with about 180,000 MSMEs and channel partners signed up across its platforms, 46 percent higher than the same period in 2020.