In a statement, NAB said it had agreed to purchase Citigroup’s Australian consumer business via an asset and liability transfer, with the bank to pay cash for the net assets of the Citigroup consumer business plus a premium of $250 million.
The bank said the required equity for the transaction was approximately $1.2 billion and that it was expected to be accretive to earnings and return on equity from completion.
“The proposed acquisition of the Citigroup consumer business brings 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 cashflows,” NAB chief executive Ross McEwan said.
“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.”
The proposed acquisition includes a home lending portfolio, unsecured lending business, retail deposits business and private wealth management.
NAB said around 800 Citi staff were expected to join the bank, including the Citi management team who would bring "specialised product expertise and strong relationships with blue-chip providers," Mr McEwan told an investor briefing on Monday.
With the bank already strong in the white label space through its mortgage business Advantedge, Mr McEwan said Citi's existing status as a major global white label credit card provider presented strong synergies for NAB to expand its offering.
"With scale and data we think we can do well in this space - there’s some good parties involved in Citi's white label arrangements and we look forward to enhancing that business," he said.
As the agreement did not include the technology systems associated with Citi's existing unsecured lending business, NAB group executive of personal banking Rachel Slade said the bank would look to overhaul its existing credit card technology and incorporate NAB and Citi products in one "modern and nimble" platform.
"With the rising competitiveness in the space and the scale this acquisition brings us, it’s a unique opportunity for us to build out a new platform. We will stand up new technology and migrate Citi and NAB products over to that and we’ll be able to get something modern and nimble, so it is unique and exciting from that perspective," Ms Slade said.
The transaction is expected to complete by March 2022.