UOB Malaysia’s proposed acquisition of Citibank’s consumer banking business is credit positive

Published on 27 Jan 2022.

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RAM Ratings views United Overseas Bank (Malaysia) Bhd’s (UOB Malaysia or the Bank, rated AAA/Stable/P1) proposed acquisition of Citibank Berhad’s (Citibank) consumer banking business as a credit positive. The acquisition of the segment with a net asset value of approximately RM4.5 bil, along with over 1,000 Citibank employees are expected to strengthen UOB Malaysia’s retail banking business and leapfrog its credit cards market position by loans from sixth to second. 

Apart from Malaysia, subsidiaries of United Overseas Bank Limited in Indonesia, Thailand and Vietnam also entered into agreements to acquire Citigroup Inc’s consumer banking businesses in the respective countries. The aggregated acquisition cost of USD3.6 bil (~RM15.1 bil) was 1.2 times the net assets. 

With total assets amounting to RM129.6 bil as at end-September 2021, UOB Malaysia is among the largest locally incorporated foreign banks. Post-acquisition, its existing loan base is expected to grow about 15% while its retail customer base will increase by roughly 70% to 1.5 mil. About 40% of the assets to be acquired are unsecured and mainly comprise Citibank’s sizeable credit card operations, which complement UOB Malaysia’s mostly secured portfolio. 

The retail banking businesses of both banks target mainly top tier and mass affluent customers, which generally have better credit profiles. While Citibank’s unsecured portfolio entails higher risk, we anticipate the impact on UOB Malaysia’s overall asset quality to be manageable. On a risk-weighted basis, the higher yield of this portfolio could improve the Bank’s returns.

We expect the acquisition to reduce UOB Malaysia’s common equity tier-1 capital ratio by about 300 bps to a still sound 14% (pro forma basis). Subject to regulatory approval, the Bank expects the integration to be completed in mid-2023. RAM will continue to monitor developments in this regard.

Separately, RAM reaffirmed Citibank’s AAA/Stable/P1 financial institution ratings in December 2021, premised on our expectation that Citibank will continue to derive extraordinary support from its parent, Citigroup Inc. For more details, please refer to our website


Analytical contacts
Chow Kah Mun
(603) 3385 2501

Sophia Lee
(603) 3385 2619


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Published by RAM Rating Services Berhad
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