Narayan AmmachchiU.S. banking giant Citigroup is reportedly close to reaching a deal to sell its consumer banking units in five Central American countries, including Costa Rica, with Spanish financial services firm Banco Popular Espanola.
Citigroup is expecting to raise US$1.5 billion from the sale of 11 banking units around the globe, according to Bloomberg, which broke the news citing unnamed sources. The Central American countries Citi is exiting are El Salvador, Costa Rica Guatemala, Nicaragua and Panama, although Citi’s shared services center in Costa Rica will remain intact.
The Colombian banking group Grupo Aval Acciones y Valores SA also made bid to purchase the Citi units, but Bloomberg confirmed that Banco Popular had edged out all other bidders and was about to finalize the deal.
Like many European banks, such as HSBC Holdings and ING Groep NV, Citigroup is spinning off several of its overseas assets as part of a restructuring plan.
As recently as last week, Citi sold its entire stake in Turkey’s Akbank to raise about $1.15 billion. This sale came on the heels of its deal to sell OneMain Financial Holdings, Inc. to Springleaf Holdings for $4.25 billion.
Citi, operating in about 160 countries, looks after about 200 million customer accounts worldwide. The other countries it is exiting include the Czech Republic, Egypt, Hungary and Japan.
The agreement would include the assumption of certain liabilities, Bloomberg said, adding that the sale price is likely to slightly exceed the units’ book value.
The reason why Citi prefered to sell its unit to Banco Popular is that the Spanish bank would cut few employees, Bloomberg reported. In October last year, Citi stated that there would be no need to lay anyone off as its units would be sold along with employees working for them.
Despite exiting these markets, Citigroup’s consumer business will still serve 57 million clients in 24 countries around the world.
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