UOB buys banks in Thailand, Vietnam, Malaysia, Indonesia

[reader]

From Channel News Asia

SINGAPORE: United Overseas Bank (UOB) said on Friday (Jan 14) that it has agreed to buy Citigroup’s consumer banking businesses in Indonesia, Malaysia, Thailand and Vietnam for about S$4.915 billion.

The proposed acquisition includes Citigroup's unsecured and secured lending portfolios, wealth management and retail deposit businesses in the four countries.

"The acquisition ... is a great opportunity that comes at the right time. UOB believes in Southeast Asia’s long-term potential and we have been disciplined, selective and patient in seeking the right opportunities to grow," said Mr Wee Ee Cheong, deputy chairman and CEO of UOB. 

UOB will fund the purchase with excess capital. The total cash consideration will be calculated based on a premium of S$915 million, plus the net asset value of the consumer business as at completion.

https://www.channelnewsasia.com/business/uob-buy-citigroup-consumer-businesses-4-countries-2434911

NOTE - UOB has locations in over 50 countries world wide.

 

[PeterRS]

I don't understand much about the world of finance. I never worked out why the Hong Kong and Shanghai Banking Corporation rebranded as HSBC and set of on a huge global expansion. The takeover of the UK's Midland Bank was probably its noticeable early acquisition. So extensive were its tentacles it then started to call itself "the world's local bank." I can remember almost 20 years ago being on a ship that stopped at a small town half way up the Amazon to Manaus and sure enough there was an HSBC branch!

Now HSBC has sold and closed part  of its business in many countries, including Thailand. Consumer banking ended here quite a few years ago. 

Citibank's adventures in Asia have also seemed somewhat quixotic. Citi was in Japan for decades and then sold of its consumer division to Sumitomo Mitsui in 2015. It does seem that for non-local banks consumer banking is no longer the profit generator it used to be.

[Guest]

As far as I can see, various businesses spend years on global expansion, then reverse the process.  

Examples include Citi Bank, Walmart, Tesco, Carrefour, M&S, Bunnings and many more.

I'm not entirely sure why, but suspect that management like to think there is a benefit from globalization and that they can do a better job of running other businesses.  Then a few years later, the process is reversed, as the same, or often new management barely have the talent to run the domestic business, never mind the international one. Of course, they certainly don't admit the lack of talent part and probably don't recognize it.

In some cases, such as Bunnings (Australian), their acquisition of Homebase in the UK failed in barely more than 2 years.

In the case of GM, they owned Opel/Vauxhall for around 90 years. Then after years of losing money, they sold it to Peugeot, who were making a profit on the division within a year.  Quality of management and culture have an awful lot to do with the results.

I also know a young lad who worked at HSBC in Canary Wharf.  It took him about 3 months to get authorization and set up on all their computer systems.  He's a high calibre individual and his co-workers said he'd done well to get it done so quickly.  That should give you a clue about how screwed up their organisation is.

Incidentally, as far as I know, the customers tend not to see much benefit from the global expansion of banks.  After all, if you have accounts with the same bank in 2 countries, I believe they still typically charge you the 3% forex fee to move money between them.  Whereas, Wise can do the job in minutes for about 0.5%.

[reader]

When large, international banks opened their operations in Thailand, and other foreign countries, two things were different than today: most banking was conducted in person and on-line banking was generally non-existent or in its infancy.

There was a not dissimilar evolution in the international airline industry. Facilitated by code-sharing and network affiliations, economies of scale changed over time. This allowed carriers to offer seamless flights involving other carriers.  Code sharing did for the airlines what ATM networks did for banking.

[PeterRS]

The comparison with airlines is interesting and no doubt accurate. Even 15 years ago I was still buying most of my airline tickets through an agency. I remember they complained about airlines reducing their commissions which had until relatively recently been 9%. By now agency commissions must be close to 0% and the customer should have benefitted as a result.

[vinapu]

7 minutes ago, PeterRS said:

..... and the customer should have benefitted as a result.

and he does. My sister lives in different country and when I go to see her nominal price of the ticket is roughly the same now it was  30 years ago. 

Then is was equivalent of about 1000 bus tickets , not the same price buys only 375 so it relatively 2/3 cheaper

[Guest]

On 1/22/2022 at 9:59 AM, PeterRS said:

The comparison with airlines is interesting and no doubt accurate. Even 15 years ago I was still buying most of my airline tickets through an agency. I remember they complained about airlines reducing their commissions which had until relatively recently been 9%. By now agency commissions must be close to 0% and the customer should have benefitted as a result.

I've never bought a plane ticket for myself through a traditional agency.

My ex-employer used an agency and I regularly had to stop their fraudulent practices on my bookings, like telling me my chosen flight had no availability (a lie), or was 50% more expensive than it was on Skyscanner.