Citi's Australia retail unit draws interest from major local banks

Melbourne

CITIGROUP Inc's retail operations in Australia are drawing interest from a host of local lenders, according to people familiar with the matter.

National Australia Bank and Australia & New Zealand Banking Group, the country's third- and fourth-largest lenders by value, are in talks with Citigroup over the assets, the sources said. ING Bank Australia is another potential contender for the unit, they added, while Macquarie Group, Bank of Queensland and Suncorp Group have also shown interest.

Discussions are ongoing, and non-binding bids are due later this month, according to the people, with the winner likely to be finalised as soon as July.

Citigroup is seeking to sell its entire Australian retail operations in one piece, the people said. It had A$3.6 billion (S$3.7 billion) of credit card assets and A$11.6 billion of loans and finance leases to Australians as at March, according to data from the Australian Prudential Regulatory Authority, which oversees deposit-taking institutions in the country.

The US lender said last month that it would exit retail banking in 13 markets across the Asia-Pacific region, Europe and the Middle East as new chief executive Jane Fraser undertakes a wider strategy refresh. Citigroup could fetch as much as US$6 billion from the sale, Bloomberg News has reported. The Australian assets are among the most valuable of those operations, the sources said.

Australia's antitrust regulator has already warned publicly that it would carefully scrutinise any attempt by one of the country's so-called big four banks to buy Citigroup's operations. The US lender is the market's fifth-biggest credit card player, with ANZ third and National Australia Bank fourth.

National Australia Bank chief executive officer Ross McEwan didn't rule out interest in the assets when asked at a parliamentary hearing last month. "Our strategy today is to grow through our own activities, but, you know, every business, be it a bank or anybody else, would look at areas that might add to customer services and make it more efficient," he said at the time.

Of the other parties that have expressed an interest in all or part of Citigroup's assets, Bank of Queensland and Suncorp both currently have so-called "white label" partnerships with Citigroup, which provides the backing of its balance sheet to the firms' own-branded credit cards. BLOOMBERG