Citi group is very soon expected to leave and shut down consumer banking operations in 13 countries including India
Citi group is an American multinational investment bank as well as provider of financial services at his headquarters in New York City. The company was formed by the merger of banking giant Citicorp and the financial conglomerate travelers group in the year 1998.
As of reports, on Thursday, the citi group announced that it is going to exit 13 multinational consumer banking markets and is shifting its focus to wealth management which is away from retail banking in small places. The citi bank is going to focus its global consumer banking business on basic four markets like Singapore, Hong Kong, London and the United Arab Emirates. But with certain expected news from the market, it’s also said that the citi group is going to depart china and 11 other retail market where there is lack to compete because of unavailability of scale of competition.
This is being informed to the market by citi chief executive Jane Fraser. He got appointed as CEO in March and described his work performance as effort to “double down” on wealth management and here the growth opportunities are better. Majority of the market is exist across Asia where the citi group’s global consumer banking business at the end of 2020 has been around $6.5 billion in case of revenues and 224 retail branches and around $ 123.9 billion in deposits.
The move came as the citi group reported first quarter profits of $ 7.9 billion and more than three times the level in a time period of one year. The revenues fell around 7 percent to $ 19.3 billion. With other larger banks, the citi group’s profit has been bolstered by its strong performance every time. Its investment banking and trading businesses as well as the release of the reserves that has set aside the bad loans. These benefits are offset somewhat by drag from the low interest rates. With this markets across Australia, Bahrain, Indonesia, south Korea, Malaysia, Philippines, Poland, Russia, Taiwan, Thailand and Vietnam.
Local lenders lead race to buy parts of Citi’s bank business from India
The citi bank is providing best of consumer banking business houses with three relevant businesses like credit card, wealth management and mortgages. It’s the bank that sells the businesses themselves separately as in form of portfolio sale. This is extracted as an expert’s impression from the bank reviews by Macquarie analyst Suresh ganapathy.
As per market reports, the India’s large and medium size private sector banks like IDFC First, RBL Bank, Kotak Mahindra Bank and IndusInd bank can be among the suitors for different businesses as of the US based Citibank that has put on the block ( reports by Macquarie research).
The Citibank’s consumer banking business houses three relevant businesses which are distinctively the credit cards, wealth management and even the mortgages that the bank is expected to sell all of them separately as a kind of portfolio sale.
Even there are players who would be interested in acquiring the credit card based businesses and even the small players are believed to be more aggressive when it comes to bidding for credit card book. The researchers have added that Citibank has been losing market share in the credit card segment over the past several years.
The Macquarie experts other mid and large private sector banks to bid for the mortgages and wealth management portfolios of the Citibank. As per the mortgages and wealth management is concerned we believed some with the mid to large private sector banks could be interested with acquiring the portfolio focusing on wealth management of the late and could be interested in the particular.
The Macquarie estimated with the corporate banking contributing more than 80% to overall bottom-line of Citibank in India. The funding comes with lot of float money from corporate and the citi is very active in this segment. The overall market share of advances and deposits is just around 0.6% and 1.1% respectively and is believed to bring on market share in the corporate loans, corporate CASA transaction banking etc would be higher for Citi.
Citigroup Inc.plans for exiting retail banking in 13 markets across Asia and Europe, Middle East and Africa region.
Citi retreat highlights global bank’s struggle in china, India
The Citigroup Inc.’s is planning to exit its retail business in China and India. This is because of the underscores with frustrating battle for market share international banks face in two of the Asia’s largest economies despite of plowing in billions of dollars over the past decades.
It’s the reason with increased rivalry from domestic lenders especially in consumer financing and fiercing competition for top talents contributing to the challenges that the overseas banks have often struggled to overcome.
In china the international banks are facing challenges despite of good moves by the authorities to make easier competition. The HSBC, Standard chartered Plc and the citigroup became the first of foreign banks allowing setup locally incorporated subsidiaries in China around 2007. Beijing is continuing to relax its rules for foreign players in the subsequent decades and has since removed the $ 10 billion threshold that is necessary for foreign banks to setup the locally incorporated banks.
Still the competition remains fierce from the state owned rivals who are dominating the financial system. They have been into long standing relationships with other government controlled enterprises which have driven much of china’s economic activity and enjoy with higher return on average assets.
The citi group is also shuttering its retail banking operations in countries from Australia to Indonesia and South Korea. The lender said it will continue to serve corporations and private banking clients into the market that is tagged for sale. In India, the return on average assets is higher than local competitors, international banks and have mainly shunned over the requirements to set aside the additional capital and establish the local subsidiaries. Other than that, they have largely remained operating in the form of branches undergoing their reluctance to expand and offer with wide range of financial services.