Citi gets better end of Aussie bank sale

2 minute read

Citigroup Latin America CEO Jane Fraser addresses a Brazil-U.S. Business Council forum to discuss relations and future cooperation in Washington, U.S. March 18, 2019. REUTERS/Erin Scott

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MELBOURNE, Aug 9 (Reuters Breakingviews) - Citigroup (C.N) Chief Executive Jane Fraser has done a decent job offloading the U.S. megabank’s Australian retail operations. National Australia Bank (NAB.AX)is paying A$1.2 billion($880 million) for the division, thereby generating some standout statistics for the seller.

The deal values the unit at more than 8 times trailing earnings in the 12 months to the end of June, compared to the less than 7 times Citi’s own worth currently commands. And it’s a juicy 1.25 times book value, whereas Citi as a whole trades at a lowly 80% of net assets.

It’s a small operation for Citi, though, accounting for less than 1% of earnings. NAB won’t do too badly: Expected cost savings alone are enough to cover three-quarters of the purchase price, although Citi’s Australian mortgage book is shrinking, integration costs look high and NAB reckons the deal will only “marginally” improve returns. The bragging rights belong in New York. (By Antony Currie)

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Editing by Una Galani and Katrina Hamlin

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