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MANILA, Philippines – Union Bank of the Philippines (UnionBank) announced four new credit cards as it continued to integrate its acquired Citi consumer business, which it bought out in a 2022 blockbuster deal.
The four new cards are the UnionBank Rewards Card, UnionBank Cash Back Card, UnionBank Miles+ Card, and UnionBank Reserve Card – all of which target separate consumer markets. The features of each card are tailored to shoppers, value-minded customers, frequent flyers, and high net worth clients, respectively.
The relaunch comes as UnionBank tries to migrate its acquired Citi credit card customer base to cards under the Aboitiz-led bank’s own brand. Citi cardholders can now gradually change to the new UnionBank credit cards.
While there’s no deadline to switch cards, UnionBank president and chief executive officer Edwin Bautista said the “absolute drop date” would likely be the end of the first quarter of 2024.
To keep Citi customers onboard after the acquisition, Bautista said the bank spent big on marketing and integration costs.
“We spent a lot to replicate the entire Citibank,” Bautista told reporters on the sidelines of the launch on Wednesday, October 25. “We had to recreate the products and features in the system that Citi built over the last 10 years in one year.”
Avoiding a higher attrition rate among Citi customers meant that UnionBank had to match Citi’s strong rewards program, which had deals across all of Asia. But Bautista said the spending paid off since UnionBank kept most of its acquired credit card customers.
“Our top-line revenues are really significant over the business that we absorbed. It’s also delivering much higher than we actually expected. The attrition rate was unbelievably close to zero,” Bautista said.
Discussing the benefits of the integration to UnionBank’s bottom line, the CEO said he expects it to “normalize at a higher revenue level” by 2024.
“The marketing spend alone is double what normally Citi spends…. But we’re being now rewarded by a much higher growth rate,” he said. “The dollar that you invest today will pay out in the next five years.”
After acquiring the Citi consumer portfolio, UnionBank is now part of the country’s top three credit card issuers in terms of usage and spends. It also currently handles about 1.5 million active credit cards.
Citi also had the highest spend per card in the entire industry before it was acquired. That means UnionBank can also now tap Citi’s high net worth customers. And they could do just that – using Citi’s own building too.
The acquisition deal also included Citibank Square in Eastwood, the ground floor of which UnionBank now plans to turn into a luxurious flagship office for wealth management.
“We’ll have a cigar lounge portion. We’re going to serve drinks,” Bautista said. “You know, the way it’s done in most wealthy countries.”
Besides its rebranded Citi cards, UnionBank has also released an S&R co-branded credit card, which gives customers rebates on S&R purchases.
Overall, the bank is currently seeing “very strong, double-digit” growth, according to UnionBank’s consumer banking head Manoj Varma. Growth in cards and loans is hitting 20% to 25% on the back of revenge spending and revenge travel, and a suppressed 2022 baseline.
“Our expectation is that it will taper off a little bit in 2024. Maybe still strong double digit. Maybe not 20% to 25%, but maybe 12% to 13%” he said. – Rappler.com