Big 4 confirms it’s looking at Citi acquisition

National Australia Bank (NAB) has confirmed that it is in discussions to buy Citi’s consumer business, which was put up for sale in April of this year.

According to the major bank, there is “no certainty these discussions will lead to a transaction”; however, NAB has said that it will update the market further “if and when appropriate”.

“NAB regularly assesses opportunities to acquire businesses that support its growth strategy in core banking markets,” the bank said in an ASX statement. Earlier this year, NAB bought neobank 86 400 for its direct-to-consumer brand UBank.

The bank’s new chief operating officer (COO), Les Matheson, also has strong ties to the group, having previously held various executive roles at Citi, including group CEO Central Asia, Citigroup country officer Australia and CEO Citibank (retail) Australia.

However, there has been pushback against major banks buying Citi’s business, with the Australian Competition and Consumer Commission chairman Rod Sims suggesting earlier this year that the watchdog would be “taking an extremely close interest” in any big four bank acquiring the business, over competition concerns.

Similarly, some of the CEOs of non-major banks have suggested that such an acquisition would be anti-competitive.

Bank of Queensland CEO George Frazis recently told the House of Representatives standing committee of economics that he was against more consolidation involving the major banks.

When asked whether he believed that “every banking acquisition just makes the banking sector a little less competitive [when we] already have one of the most concentrated banking sectors in the world”, Mr Frazis said: “We personally would not be supportive of any further consolidation if that could be avoided with the four majors.

“If you look at the combination of BOQ and ME Bank, which is strategically very compelling, that does create a much more competitive environment. But even with that combination, our combined group has in the order of about a 3 per cent share of the banking sector.

“So, we are still quite a small player.”

Netherlands banking group ING and Macquarie Group have both previously been reported as being interested in buying the group's $2-billion banking business in Australasia.

The Citi sale

The global bank has put its consumer banking business up for sale in Australia and 12 other countries, including India and China, as it focuses on more profitable parts of its business like investment banking.

Citi is the fifth-largest issuer of credit cards in Australia, behind the big four banks, and was the first foreign bank to be granted a banking licence in 1985.

It is looking to exit its consumer business, including mortgages, loans, retail banking and credit card operations, in Australia and 12 other markets.