The National Australia Bank (NAB) has announced it will be adding over 1 million credit card customers to its P&L sheet via the acquisition of Citigroup’s consumer banking business.
The $1.9 billion deal, which includes a cash deposit of $250 million, will see NAB take custody of $12.2 billion in loans and $9 billion in deposits.
NAB CEO Ross McEwan said that the proposed acquisition will bring “scale and deep expertise in unsecured lending, particularly credit cards, which continue to be an important way for customers to make payments and manage their cash flows”.
“The cards and payments sector is rapidly evolving, and access to a greater share of payments and transaction data will help drive product and service innovation across our personal banking business and deliver market-leading customer experiences,” he said.
Citi currently provides credit cards for a number of Australian financial institutions, from the Bank of Queensland to Qantas, Suncorp and Virgin Money.
Mr McEwan called the acquisition an “opportunity to grow with existing partners and add new partners”.
In the lead-up to the finalisation of the deal, Citibank will continue to operate its consumer banking business as usual.
It is not yet clear how the deal will affect Citi’s recently announced buy now, pay later platform ‘Spot.’
Citi said that it will be contacting customers in the coming months with more information about what the acquisition will mean for them.
In the meantime, Citi CEO Jane Fraser said, “This is a positive outcome for our clients, our colleagues and for Citi.”
According to her, this transaction shows that the company is “moving forward with urgency as we refresh our strategy and execute the decisions we have already made as part of that effort”.
A transitional services agreement is expected to be in place for 30 months after the deal closes, since NAB won’t be acquiring any of the technology systems or platform that Citi currently relies on.
The bank said they expect to spend $375 million over the next two years in acquisition and integration costs, with a total of 800 Citigroup employees set to be folded into the NAB workforce.
While NAB estimates that the deal will close by March 2022, it won’t go ahead without the approval of the Commonwealth Treasurer, APRA and the ACCC.
Back in July, NAB indicated it was in talks with Citigroup to purchase the company’s Australian consumer banking business.
At the time, ACCC chair Rod Sims warned that the regulator would look closely at any consolidation between Citi and Australia’s big four.
“Citi is an important player, particularly in [credit] cards, so this is something we’d have a very, very close look at,” he said.
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