Itau Unibanco’s Purchase Of Citigroup’s Brazilian Assets Approved

Italy’s Unibanco announced last week that it had received the final approval from the central bank to acquire the retail banking unit of Citigroup in Brazil. According to the Italian bank, completion of the deal will take place by the end of this month.

Earlier in the month Unibanco had agreed to acquire the insurance and retail banking assets of Citigroup in Brazil at a price of $220 million. Two months ago the antitrust authority in Brazil, Cade, had given its approval for the acquisition after terms were agreed on. Among the terms was one forbidding Unibanco from purchasing other financial firms for a period of two and a half years.

Saudi Arabian entry

The move by Citigroup to sell its insurance and retail banking assets in South America’s biggest economy coincides with plans by the U.S. lender to recruit around 20 bankers for its Saudi Arabian operations which it plans to restart before the year ends. Citigroup acquired a license to conduct investment banking activities in the Middle Eastern country six months ago.

“The total number of people we want to have on the ground for the CMA license is up to 20 for our medium-term plans here. If things stay on track, then we’ll continue to invest. The opportunities here are self evident,” James Forese, president of Citigroup,said.

Attractive destination

Citigroup is making a comeback to Saudi Arabia after an absence of over a decade. The bank lost its license in 2004 after selling a stake it had in Samba Financial Group. Citigroup’s acquisition of a license in Saudi Arabia comes at a time when the kingdom is emerging as an attractive destination for foreign banks.

Partly this is because of an ongoing overhaul of the kingdom’s economy. Saudi Arabia is also planning to have Aramco, the country’s oil giant, listed and this could turn out to be the biggest-ever IPO. Citigroup has twice tried unsuccessfully to make a comeback in Saudi Arabia – in 2010 and 2006.

According to Citigroup’s country officer for Saudi Arabia, Carmen Haddad, by next year’s first quarter the bank will be fully staffed while the investment banking team will be in place in two months’ time. Having an office in Saudi Arabia will allow the bank to pitch for jobs such as local advisory work and this includes initial public offerings as well as takeovers. Last year Citigroup played a major role in the kingdom’s sale of a bond worth $17.5 billion.

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