ACCC may block NAB's acquisition of Citi's consumer arm

On Monday afternoon, NAB ambitiously made the decision to buy Citigroup’s consumer banking arm in Australia for $1.2 billion, despite having been warned by the ACCC about this acquisition.

Here’s what happened: Back in April, Citi put its consumer banking up for sale in Australia and in 12 other markets across Asia, Europe and the Middle East to focus on more profitable parts of its business. 

Citi is among the top five issuer of credit cards only behind the big fours. If one of the big fours buys this arm, it would further reduce the competition between who controls credit cards across the Big Four. 

That’s why the competition regulator gave a word of warning that it would investigate and could block any buying attempt by Australia’s big four banks. 

NAB didn’t seem to have any issue with it. During a parliamentary hearing on the big banks, Chief executive Ross McEwan refused to rule out bidding when questioned by legislators at the time. 

And with good reason: NAB wants to grow the areas that will add to their customer services and make it more efficient, if it means hunting down acquisition opportunities and jumping straight into the action. The big bank also bought digital-only lender 86400 for $220 million which was approved by the ACCC in March. 

NAB finally announced on Monday it’s buying the consumer business under an asset and liability transfer plus a cash premium of $250 million and an assorted  $7.9 billion in residential mortgages, $9 billion in bank deposits, and $4.3 billion in unsecured lending.

On top of that, 800 employees of Citigroup will go over to NAB. 

We’re curious to see how the ACCC will respond to this decision and whether the acquisition will go ahead and be finalised by March 2022. ACCC’s Chairman Rod Sims is keeping a close eye on this deal, considering credit cards, including white label credit cards among other areas of overlap. Mr Sims is aware of the increasingly competitive credit card market driven by neobanks and smaller banks. 

If the deal is approved, it will double the size of NAB’s credit card business and establish it as the key rival with CBA.