According to people familiar with the venture, Citigroup Inc. could make up to $6 billion, from the sale of retail banking assets in 13 markets across Asia-Pacific, Europe, and the Middle East as the lender moves forward with plans to fine-tune its global branch network.
The sale process for Australia is the most advanced, and preliminary demand for many of the assets has come primarily from local players, according to the people, who asked not to be named because the information is confidential. According to the sources, exits from other markets, such as Southeast Asia and Poland, are at an earlier level. The entire sales process is still in its infancy, and the timetable and valuations can change.
On a conference call with investors last week, Chief Executive Officer Jane Fraser said, “In terms of pacing, look, we’re just getting started and there’s no dilly-dallying here.” “We’ve started working.”
Citigroup intends to exit retail banking operations in Australia, Bahrain, China, India, Indonesia, South Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand, and Vietnam in the long run, while it will continue to support companies and private banking clients in those markets.
The moves are part of a larger strategy refresh at Citigroup under Fraser, who took over in March. Citigroup told investors last week, that 13 markets would have generated $4.2 billion in revenue in 2020. Even so, operating costs and provisions for credit losses ate into that, leaving the combined units without a profit for the year.
Citigroup will now run its consumer banking franchise in the Asia-Pacific region, Europe, the Middle East, and Africa from four wealth centres in Singapore, Hong Kong, the United Arab Emirates, and London following the exits.
In a LinkedIn post, Peter Babej, CEO of Citigroup’s Asia-Pacific region, said, “The decision to seek exits for the other consumer businesses in these regions was of course difficult — each is a source of pride, with talented teams passionate about Citi and our customers.”
“However, a thorough analysis concluded that doing it right in the long run necessitates allocating more money to areas where we have the most differentiated solutions to clients,” he added.
The New York-based bank has been establishing a wealth-advisory centre in Singapore. More than 300 relationship managers and product specialists will be able to work in the 30,000-square-foot (2,800-square-meter) building, which is the bank’s largest of its kind.
It’s possible that some retail companies would be difficult to sell. Citigroup, for example, owns approximately 75% of Bank Handlowy SA in Poland. According to a source familiar with the situation, the company could fetch more than 300 million euros ($360 million). Although the selling of the retail sector is expected to begin in the coming weeks, it will have to be separated from Bank Handlowy.
Government officials in Taiwan have already warned that they will track Citigroup’s high-net-worth clients in Taiwan and prevent them from being transferred to its Hong Kong and Singapore units. Nonetheless, the bank has confirmed that it has begun receiving offers for its Australian operations from a number of interested parties. For the time being, Citigroup is handling the sales of its own internal mergers and acquisitions team. In a statement last week, Marc Luet, CEO of Citi’s consumer bank in Australia, said, “Citi’s consumer bank in Australia is an attractive and successful venture, employing highly qualified and committed team members.” “Citi is dedicated to providing the best possible experience for our staff and customers.”
