Citigroup to Exit Retail Banking in 13 Countries Including the Philippines to “Double Down” on Wealth Management

Citigroup to cease its retail operations in 13 countries, namely: Australia, Bahrain, China, India, Indonesia, Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam. Wholesale operations in these countries will continue.

Recently appointed Citigroup CEO, Jane Fraser pulled the plug on Thursday, April 15th, as part of an ongoing strategic review in order to “double down” on wealth management, a source of potentially higher growth and profits.

Fraser explained that Citi lacks the scale it needs to compete there. In the first quarter, Citi’s consumer banking business in Asia generated revenues of $1.6 billion, a 9% decline from the first quarter of 2020. The company, however, reported strong first quarter earnings overall in spite of this.

Nathan Stovall, S&P Global Market Intelligence (via Forbes): “Citi decided to exit its consumer business in 13 countries because the operation simply wasn’t profitable. While the consumer operations in those markets had $82 billion in assets – roughly the size of a large regional bank in the U.S. – Citi said the businesses generated zero income last year.”

“Any bank should arguably consider whether to remain in a business that is not earning its cost of capital, much less one that is producing no earnings. We have seen other banks make similar decisions recently,“ said Stovall (via Forbes).

Western banks HSBC and RBS have also lessened their foreign retail banking operations in recent years for similar reasons.

SOURCE(s): Inquirer, Forbes