UnionBank: Asia Pacific’s Digital Trailblazer
Amidst its digital transformation journey, Aboitiz-led Union Bank of the Philippines is doubling down on achieving its goal to become a “Great Retail Bank.”
Edging out the country’s largest lenders in the competition, UnionBank is expecting to close the acquisition of the consumer banking business of global banking giant Citigroup in the Philippines by the second half of the year.
“The acquisition will accelerate the bank’s objective of becoming a Great Retail Bank given Citi’s market leadership in the credit cards, personal loans, and wealth management business,” UnionBank president and CEO Edwin Bautista said.
Last December, UnionBank entered into a Share and Business Transfer Agreement worth about P55 billion with the subsidiaries of Citigroup to acquire Citi’s retail banking segment. The deal involves P89.5 billion worth of consumer banking business, including loans of P59.7 billion, deposits of P70 billion, investment assets under management of P95 billion, and close to one million customers, many of whom are high-end and Citi cardholders.
The transaction covers Citi’s credit card, personal loans, wealth management, and retail deposit businesses. It also includes Citi’s real estate interests in relation to Citibank Square in Eastwood, three full-service bank branches, and five wealth centers. “Our acquisition of Citigroup’s consumer banking business puts us in prime position to ramp up our growth aspirations – allowing us to increase our credit card business and expand our banking business in the higher end segment of the consumer market,” Bautista added.
To fund the acquisition, the lender successfully raised P40 billion through a stock rights offering (SRO) wherein it issued additional shares to existing shareholders led by Aboitiz Equity Ventures Inc., The Insular Life Assurance Co. Inc., and pension fund manager Social Security System (SSS). UnionBank also raised P11 billion via the issuance of the country’s first-ever digital peso bonds for its debt liability management.
Pursuing its digital transformation journey
To pursue its digital transformation journey, the country’s 9th largest bank in terms of assets is launching UnionDigital Bank Inc. also in the second half of the year In July last year, the Bangko Sentral ng Pilipinas (BSP) granted a digital banking license to UnionDigital. It is the only digital bank established by a universal bank among the six licensees approved by the central bank.
“Our digital bank, UnionDigital, is also on- track to launch by the second half of the year. We are closely working with the regulators to complete key requirements for the start of our operations,” Bautista said. UnionBank’s Board of Directors approved the infusion of additional capital of up to P2 billion into UnionDigital Bank.
“We will leverage on both existing and emerging technologies to support the digital economy and create products and services to ensure ease of use of financial services, like payments, for the benefit of the unbanked and underserved segments,” Bautista added.
SSS partnership for UMID Pay Card Program
The Aboitiiz-led bank has partnered with Social Security System (SSS) to develop the Unified Multi-Purpose Identification (UMID) Pay Card. To be launched in the fourth quarter of the year, this initiative is part of the goal of making financial services more accessible to Filipinos. Harnessing UnionBank’s superior digital banking capabilities and innovation, the upgraded version of the UMID Card will provide SSS members with a number of new features and benefits. Members will be able to upgrade to the new version of the card when it fully launches in the fourth quarter. One of the main benefits offered by the new card is the convenience of having an SSS and government ID and a UnionBank debit card in one. With it, SSS members can conveniently receive their loan and benefit proceeds and even refunds directly and securely through their UnionBank Account. The card can also be used for basic banking services.
The newly upgraded card gives SSS members easy access to the UnionBank Online app, UnionBank’s banking and fintech superapp designed to revolutionize banking like no other banking app can. Bautista said the Aboitiz-led bank is truly humbled and honored with this opportunity to be the first bank to work on this program with the SSS. “As you all know, teching-up Pilipinas is one of our advocacies and by ensuring that we help the members of SSS, employees, self-employed and voluntary members of society, we help ensure that every Filipino should have a bank account and should enjoy the benefits of digital, as they say, so that when the country moves up and prospers in a significant way, no one gets left behind,” Bautista said.
For his part, SSS president and CEO Michael Regino said the signing of a memorandum of agreement (MOA) is a milestone for SSS, ensuring that an ordinary SSS member could now become a bankable person with the UMID card. #
