Citi sells China wealth business as part of international consumer retreat
Citigroup (C) is winding down another piece of its consumer banking empire outside the US in the latest step by CEO Jane Fraser to simplify America's third-largest bank.
The New York lender on late Sunday announced an agreement to sell its consumer wealth portfolio in China to HSBC.
The sale includes deposits and investment assets under management of $3.6 billion and does not include the bank’s institutional operations in China. At the end of last year, Citi’s consumer bank in China employed 1,200 local workers, and HSBC plans to extend offers to some of those employees.
Two months after Fraser became CEO in 2021, Citigroup first announced plans to exit 14 consumer franchises in Asia, Europe, the Middle East, Africa, and Mexico. The bank has since closed eight of these franchises, including Australia, Malaysia, India, and Taiwan.
The bank plans to close the sale of its consumer operations in Indonesia before the end of 2023, a Citigroup spokesperson said.
"We are taking important steps forward in exiting our consumer banking business in China and continue to make progress in our divestitures as part of our strategy to simplify Citi," Citi’s head of legacy franchises Titi Cole said in a statement.
The consumer retreat from certain parts of the world is part of a larger reorganization underway at Citigroup as Fraser hopes to improve the bank’s profitability and revive its stock price, which has trailed peers for years.
Citigroup fell more than 1% in Monday morning trading but recovered by the afternoon to trade slightly up. Since the beginning of 2023, the stock has declined more than 10%, hitting its lowest price in three years last Tuesday.
The KBW Nasdaq bank index is up 0.85% on the day. Year to date, it has fallen 25%.
In September, Fraser laid out a corporation-wide reorganization that she called the "most consequential" change to how Citi operates in nearly two decades. The reorganization is meant to remove decades of corporate bloat across the big bank by splitting its operations into five separate units, with leaders each reporting directly to Fraser.
She described the shift as Citi’s "big next step" after its decision to shed its legacy consumer businesses.
The reorganization is expected to eliminate middle managers who no longer fit into the bank’s newly established five businesses. Citi has not disclosed expected layoffs or expenses tied to that move though Fraser made it clear the change will mean reductions in the bank’s 240,000-person workforce.
"We'll be saying goodbye to some very talented and hard-working colleagues," Fraser wrote in a September memo.
Over the first half of 2023, Citigroup laid off 5,000 employees, the bank said in July. A Citi spokesperson said the bank will offer an update on its sweeping reorganization when it reports third quarter earnings Friday.
Actual figures on the reductions, however, will not come until sometime early next year. For the quarter, the bank is expected to report a net profit margin less than half as good as its peers, according to analyst consensus estimates as compiled by Bloomberg.
David Hollerith is a senior reporter for Yahoo Finance covering banking and crypto.
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