Citigroup to sell off consumer business in India
- In Reports
- 10:20 PM, Apr 16, 2021
- Myind Staff
US-based Citigroup has announced that it is exiting banking operations in India.
It is not just India; Citigroup will be exiting as part of the ongoing strategic review.
The reason for exit is the lack of scale in some markets where either because of regulations or otherwise, the bank was not able to build scale in consumer banking.
Indian banking regulators did offer a window to foreign banks for national treatment in setting up branches or acquisitions (M&As) provided they switch from the current branch model to a wholly-owned subsidiary model. In fact, only Singapore-based DBS took the subsidiary route and was also rewarded when RBI approved its acquisition of South-based Laxmi Vilas Bank.
"We believe our capital, investment dollars, and other resources are better deployed against higher returning opportunities in wealth management and our institutional businesses in Asia," said Jane Fraser, CEO at Citi.
Citi Bank, which operates in India as a branch of the global giant, has a balance sheet size of Rs 2.18 lakh crore. The other two big foreign banks in India are HSBC with a balance sheet size of Rs 2.11 lakh crore and Standard Chartered with Rs 1.84 lakh crore in 2019-20.
The US giant will not sell its wealth management and institutional business which earns the bank major fee income. It will sell off the retail accounts and credit cards, and indicated that there won’t be any layoffs or closure of offices in India.
The bank will exit 13 international consumer banking markets, including India and China, shifting its focus to wealth management and away from retail banking in places where it is small. Citigroup will focus its global consumer banking business in four markets: Singapore, Hong Kong, London and the UAE.
Ashu Khullar, CEO, Citi India, said, “There is no immediate change to our operations and no immediate impact to our colleagues as a result of this announcement. In the interim, we will continue to serve our clients with the same care, empathy and dedication that we do today.”
Some feel that the reason for selling the consumer banking business is that the profits of the consumer banking business have been under stress and a lot more capital was needed to run that business.
(Inputs from agencies)
Image Source: Mint
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