The deal will see the bank's subsidiary Citibank Overseas Investment acquire 100 per cent of BOOC and will boost its retail presence in the territory to 66 outlets.
It is thought that the takeover will enable Citigroup to expand in the territory, but still comply with Taiwanese banking regulations intended to encourage mergers by preventing foreign banks from opening branches of their own.
Eddy Yang, of Taiwan Ratings, told Reuters: "It's not easy for any bank to expand their branch network in Taiwan, and buying existing banks is the quickest way to achieve that."
Citigroup currently lags behind its rival HSBC in the Asian market, but once the acquisition is completed will stand as the 13th-largest foreign bank in Taiwan.
The bank is currently pursuing an overseas expansion agenda in keeping with chief executive Charles Prince's stated aim that earnings from international markets should constitute 65 per cent of its total.