Overpriced? UnionBank drops 7% since revealing P72B price tag for Citibank, nearly triple US bank’s Philippine assets

Shares of Union Bank of the Philippines (UBP) have fallen sharply since revealing the actual price it paid for swallowing Citibank’s Philippine assets.

UBP has lost seven percent to P75 since announcing the completion of Citibank’s takeover on August 1. UBP peaked at P105.76 when Citibank announced the bank as the preferred bidder in December 2021.

PCC clears UnionBank-Citi PH buyout

UBP trumped its much bigger rivals BDO, Metropolitan Bank and Trust Co., and Bank of the Philippine Islands in last year’s bidding with a jaw dropping P72 billion purchase price for Citibank, or roughly 30 percent more than previous estimates.

UBP said it paid a premium of P45.3 billion over Citibank’s net asset value of P26.7 billion which includes its consumer banking activities, shares in Citicorp Financial Services and Insurance Brokerage Philippines, Inc., and its shares in Citibank Square building in Eastwood, Quezon City.

“With the Citi consumer portfolio, UnionBank will become part of the top 3 credit cards issuers in terms of usage and spends,” said UBP.

Aboitiz family heiress and UBP executive vice president Ana Maria Delgado said the Citibank takeover would strengthen the bank’s presence in credit cards, salary or personal loans and mortgage loans.

“This acquisition accelerates our goal of becoming the greatest consumer bank in the Philippines with one of the most diversified consumer banking portfolios among the listed banks today,” said Delgado. .

UBP president and CEO Edwin R. Bautista called the purchase a “game changer.”

Game changer: Erramon Aboitiz raising P40B from rights offering to bankroll UnionBank’s purchase of Citibank’s consumer assets in PH

“We are now a much larger consumer bank. We added a consumer portfolio that is well-run and very profitable. This will provide us better margins and allow us to maintain our industry-leading ROE (return on equity) moving forward,” said Bautista.

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