Citigroup's US-based chief executive Charles Prince said last month he wanted to increase earnings from foreign markets to up to 65 per cent of its total from a current 45 per cent.
"The most important global strategy for Citi is to expand our international presence and profitability. It is the same strategy we are using in Taiwan," the group's Taiwan country officer Morris Li told a news conference yesterday to announce the deal.
The acquisition reflects a broader worldwide consolidation as major global players beef up their international portfolios, particularly in fast- growing Asian markets.
Citigroup, the world's most valuable bank, is also buying Nikko Cordial Corp, Japan's No.3 brokerage, for US$14 billion and, in November, it led a group buying control of China's Guangdong Development Bank for US$3.1 billion.
Citigroup also plans to raise its stake in Shanghai Pudong Development Bank to 19.9 per cent from below 5 per cent.
The acquisition will boost Citigroup's Taiwan-based assets to US$22.8 billion, ranking it 13th on the island, and increase its number of branches to 66 from 11.
Citigroup said it will set up a subsidiary to buy BOOC, with completion set for the second half of this year.
The deal is subject to Taiwan and US regulatory approval.
Li said BOOC should turn a profit next year. In the 2006 first quarter, the bank posted a net loss of T$510 million. - Reuters
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