Citigroup (C) bought the largest online bank in the world, Egg Banking at $ 1.13 billion. Citi got in return 3 million credit card customer and $ 18.6 billion in assets. Citi’s total asset stands at $1.8 trillion.
So did Citigroup get a great deal ? In 2004, Bank of America (BAC) paid $48 billion for FleetBoston which had $ 196 billion in assets, J.P. Morgan Chase (JPM) paid $58 billion for Bank One which had $320 billion in assets, Wachovia (WB) paid $14.3 billion for SouthTrust which had $54 billion in assets. In 2005, Bank of America paid $35 billon for MBNA which had $ 123 billion in credit loans. In 2006, Wachovia paid $25B for Golden West which had $125 billion in assets, Regions Financial (RF) paid $10 billion for AmSouth which had $58 billion in assets.
When you compare all the recent mergers on cash paid/dollar assets acquired, it seems like Citigroup got a very good deal with minimum risk. It is acquiring an online bank with online assets, which can be combined with Citi’s current online technology or maintained separately. Egg’s internet capability, customer friendly screen and customer friendly maneuverings makes it an asset for Citigroup customers around the world. Citi plans to use Egg’s internet banking model for Austrialia, Japan, Singapore and U.S. markets. Places like India, Dubai and Poland will not use this model for now since they have a very good on-ground presence.
In other news Citigroup’s $10.8 billion takeover offer for Nikko Cordial Corp, Japan’s third-largest brokerage, was rejected. Citigroup also plans to buy Bank of Overseas Chinese for $425 million.
Recommended Book: Jim Cramer’s Mad Money: Watch TV, Get Rich.
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