Citigroup pulls the plug on retail banking operations in 13 markets including Australia

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Summary

  • Citigroup has decided to exit the consumer banking business in Australia and 12 other markets as part of a global strategy to focus on institutional business.
  • The group plans to operate its consumer banking franchise in Asia and EMEA solely from four wealth centers.
  • For the first quarter 2021, Global Consumer Banking revenues were down but healthiest in recent history.

Citigroup Inc., a multinational investment bank and financial services company, will be winding up retail banking operations in 13 countries including Australia.

The US banking giant’s exit list features Australia, Bahrain, Korea, Thailand, Malaysia, the Philippines, China, India, Indonesia, Poland, Russia, Taiwan, and Vietnam. The group’s Institutional Clients Group will however continue to serve clients in the markets where it is ending consumer operations.

Australian banks under the spotlight

On the ASX, major banks opened the day lower on 16 April 2021- Commonwealth Bank of Australia (ASX:CBA) was down 0.04% at AUD 87.87%, National Australia Bank Limited (ASX:NAB) was down 0.89% at AUD 26.60, Westpac Banking Corporation (ASX:WBC) quoted AUD 25.35 a share, down 0.58% whereas Australia and New Zealand Banking Group Limited (ASX:ANZ) was down 0.76% at AUD 28.70.

Insurance companies’ performance seemed to be a mixed bag. For instance, Suncorp Group Limited (ASX:SUN) opened down by 0.5% at AUD 10.40 and NIB Holdings Limited (ASX:NHF) quoted AUD 5.46 a share, trading up AUD 0.36.

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Meanwhile, NAB, Australia’s largest business bank is under the spotlight. It is witnessing clear signs of business getting back in line. Its bankers are approving more loans to businesses compared to the pre-pandemic phase. Besides, new and increased lending to SMEs is up.

Citigroup’s strategic actions in Global Consumer Banking

Citigroup aims to direct investments and resources to the businesses where it has the greatest scale and growth potential. Subsequently, it will focus on its Global Consumer Bank presence in Asia and EMEA on four wealth centers- Singapore, Hong Kong, the UAE, and London.

Its exit from the consumer franchises in 13 markets across the two regions indicates that in these markets, the group does not have the scale required to compete.

Citigroup’s investment dollars, capital as well as other resources are relatively better deployed against higher returning prospects in wealth management along with institutional businesses across Asia, says CEO Jane Fraser.

Citigroup’s first quarter 2021 performance

Net income for the first quarter 2021 was reported to be US$7.9 billion, while revenues decreased 7% from the prior-year period to US$19.3 billion.

At quarter end-

  • Allowance for credit losses on loans was US$21.6 billion.
  • End-of-period loans stood at US$666 billion.
  • End-of-period deposits were US$1.3 trillion.
  • CET1 Capital ratio was 11.7%.

On 15 April 2021, Citigroup’s stock quoted US$72.54 on the NYSE, down by 0.51%. The market capitalisation stood at US$151.37 billion.


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