US banking giant Citigroup announced on April 26 that it is buying the Central and Eastern European custody services business of ING. The sale is part of the Dutch group's continued push to pay off a 2008 bailout, illustrating that the emerging market region's banking sector - heavily dominated by Eurozone groups that pushed the boat out to grab market share during the boom - looks set to feel the effects for an extended period.
Citi's acquisition covers assets worth €110bn in Bulgaria, Hungary, the Czech Republic, Romania, Russia, Slovakia and Ukraine, according to statements form both buyer and seller. The value of the transaction has not been revealed, and the deal is expected to be completed in the second quarter.
ING said the transaction will not have a material impact in its results. The transfer is subject to regulatory approvals, it added. The full migration of clients business is expected to be finalised in the first quarter of 2014, Citigroup said.
The Dutch bank has offloaded several of its operations around the globe over the past couple of years as part of a divestment drive aimed at raising cash to pay off the €10bn bailout it took in 2008. The bank had already separated its insurance and banking operations and sold its Latin-American businesses in 2011, reports AFP, as well as disposing of ING Direct USA in February. It is now preparing an IPO for its US subsidiary, from which it hopes to raise up to $1.5bn.
The transfer of local custody services in is in line with ING's strategic objective of sharpening the focus of the bank and a result of the strategic review of ING Commercial Banking's business portfolio presented in November, the bank said.
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