Citigroup plans to sell stake in Fubon

Citigroup Inc and Fubon Financial Holding Co (富邦金控) announced yesterday that they have decided to pursue separate growth, with Citigroup planning to sell its 10.2 percent stake in Fubon.

"While our joint businesses with Fubon Financial have been successful, both companies' strategies for participating in the property and casualty insurance sector in the Taiwan and Asian markets have evolved," Robert Morse, chief executive officer of Citigroup Global Corporate and Investment Banking Group, Asia Pacific, said in the joint statement.

"With great respect for each other, we have therefore agreed that it is time for our companies to pursue our separate growth strategies in the region," Morse added.

Citigroup plans to initially sell into the public markets approximately 70 million shares, or 0.8 percent, of Fubon. The world's biggest financial services company then will consider the divestiture of all or part of its remaining Fubon shares, the statement said.

"The pull-out was mainly due to differences in operating and shareholding strategies," said Victor Kung (龔天行), Fubon's chief financial officer. "Fubon has become more focused on banking after the creation of its financial holding company and Citigroup has changed its strategy to focus on insurance as well as its non-majority investments."

There is no timetable for the completion of Citigroup's disposal of its stake, said Kung. He declined to comment on whether the US investment bank asked to buy a majority stake in Fubon, or whether there are any other buyers for the stake.

"Fubon Financial and Citigroup will continue to seek ways to cooperate as we each pursue independent growth opportunities that reflect th evolving marketplace and our respective strategies," Daniel Tsai (蔡明忠) and Richard Tsai (蔡明興), co-chief executive officers of Fubon, said in the statement.

"Citigroup's pull-out is disappointing," said Kenny Lu, a fund manager at AIG Securities Investment & Trust Co in Taipei. "Fubon failed to deliver its strategy to bring in foreign expertise and to enhance future profitability by introducing strategic foreign investor."

In 2000, Citigroup paid NT$23 billion (US$691 million) for a 15 percent stake in Fubon Financial, previously known as Fubon Group before its formation as a financial holding company in 2001. Citigroup's stake was diluted to about 10 percent in 2002 when Fubon issued new shares to buy rival TaipeiBank (台北銀行).