Citigroup Inc.is buying a Central American banking group for US$1.5 billion in stock and cash.

The U.S. banking giant said that it has reached a definitive agreement to acquire the subsidiaries of Grupo Cuscatlan from its holding company Corporacion UBC Internacional SA. Grupo Cuscatlan has operations in El Salvador, Guatemala, Costa Rica, Honduras and Panama.

Citigroup will acquire Grupo Cuscatlan’s banking and financial intermediaries, including pension and insurance operations in El Salvador. This transaction will further expand Citigroup’s corporate and retail operations in the region and complement its pending acquisition of Grupo Financiero Uno, the largest credit card issuer in Central America.

Grupo Cuscatlan subsidiaries offer corporate and commercial banking products and services, as well as a growing suite of consumer banking products. The group has US$5.4 billion in assets, US$3.5 billion in loans, US$3.4 billion in deposits as of September 30. It currently serves more than 45,000 corporate clients and 1.2 million consumer clients through a distribution network of 202 branches and 263 ATMs throughout the region. It has approximately 5,000 employees.

“The acquisition of Grupo Cuscatlan is another significant step in expanding Citigroup’s businesses in Latin America,” said Charles Prince, chairman and CEO of Citigroup. “This transaction complements our recent acquisition of Grupo Uno and, taken together, these transactions quickly and significantly strengthen our distribution capabilities and product offerings to serve retail and
corporate clients in Central America.”

The transaction, which is subject to regulatory approvals, is anticipated to close in early 2007.