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Citigroup exits consumer banking in 13 markets Asia, Europe, and Middle East

Citigroup exits consumer banking in 13 markets Asia, Europe, and Middle East
By Nikhil Batra
  • Citigroup halted the consumer operations in 13 markets in Asia and Eastern Europe
  • Citi has no suitable scale to compete in these 13 markets
  • Citi Singapore to remain unaffected by changes

Citigroup exits in 13 international consumer banking markets to shift its focus on wealth management options. The 13 markets were Australia, China, Bahrain, India, South Korea, Indonesia, Malaysia, Philippines, Russia, Poland, Thailand, Taiwan, and Vietnam.

The banking group takes this step to exit the retail banking markets, as it doesn’t find a suitable scale to compete and instead, would run these operations from four main hubs in Singapore, Hong Kong, the United Arab Emirates, and London. Citigroup’s decision to exit and sell most of its Asian retail business marks an end of an era for several markets. However, the bank will still provide products for larger clients and institutions in these markets.

Citi exited in most of the markets in Asia, where the global consumer banking business recorded $6.5 billion in revenues, $123.9 billion in deposits, and has 224 retail branches at the end of 2020. The move came as Citigroup reported first-quarter profits. The revenues fell 7% to $19.3 billion.

Citi has no suitable scale to compete in 13 markets

Citi decided to double down on wealth and will operate its consumer banking franchise in Asia and Europe, the Middle East, and Africa (EMEA) solely from four wealth centers such as Singapore, Hong Kong, UAE, and London.

"While the other 13 markets have excellent businesses, we don't have the scale we need to compete. Our capital, investment dollars, and other resources are better deployed against higher returning opportunities in wealth management and our institutional businesses in Asia," Jane Fraser, CEO at Citi said.

She said, “This positions us to capture the strong growth and attractive returns the wealth management business offers through these important hubs”.

Peter Babej, Citi's CEO for Asia-Pacific said they will invest to grow the integrated wealth, payments, and banking businesses in Hong Kong and Singapore hubs. "We will also continue expanding our institutional presence. Asia is critical to our firm's strategy."

As the banking group exits from the key markets in Asia, other rivals are trying to expand in the region. Various bankers and analysts also expect rivals to show interest in buying some of Citi’s business in Australia and India.

Citi is the largest foreign bank in India that serves 2.9 million customers. It holds 35 branches, which makes the bank profitable. CEO Ashu Khullar said there will be no immediate change to the operations.

Marc Luet,  CEO at Citi’s Australian branch said the bank has already received interest from several potential buyers. The bank has $9.3 billion in outstanding loans in Australia.

HSBC plans a new venture and is seeking out wealthy customers in China. It will be employing 3,000 bankers over the next five years. Apart from HSBC, US firms such as JP Morgan and Goldman Sachs will expand their operations in China.

Citi Singapore to remain unaffected by changes

Amol Gupte, Head of ASEAN and Citi country officer for Singapore at Citigroup said Singapore is a critical hub for the banking group and it serves as a global gateway for its clients across the world and in Asia. If you are a resident of Singapore and holds a bank account, there is no need to worry.

Amol said the country plays an important role in consumer, wealth management, and institutional businesses. “With a 120-year history in Singapore, we will also remain as a significant operational and technology hub serving our businesses internationally.”

Citigroup is among the largest credit card issuers in Singapore and has provided digital credit cards to accommodate tech-savvy Singaporeans.

The US-based bank is building a wealth advisory hub in Singapore, which is the largest of its kind. It has room for more than 300 relationship managers and product specialists

Citi’s consumer banking operations elsewhere in the region have not gained much success. In 2004, Citi paid $2.7 billion to acquire KorAm Bank which had more than 200 branches across South Korea. After Citi acquired the bank, it has slashed the number of branches.

Other banks also left the Asian consumer banking market in recent years. Australia and New Zealand Banking Group sold its retail management unit in 2016 to DBS Bank for failing to hold the market.

In the same year, Barclays also sold its private banking units that were established in Singapore and Hong Kong to OCBC as a part of its reorganization. DBS Bank also bought Societe Generale's Asian private bank in 2014.