Citigroup’s Asia Chief Calls Retail Exit a Strategic Necessity

Bookmark

Citigroup Inc.’s decision to exit retail banking operations in 13 markets outside the U.S. including China was crucial for its ability to redeploy capital to areas where it can make bigger profits, according to an internal memo by the bank’s Asia-Pacific chief.

“This was not about any specific markets or the attractiveness of individual consumer markets,” Peter Babej said in a memo to staff in the region that was obtained by Bloomberg. “It was about a strategic necessity to make additional investments in those areas where we are best positioned to differentiate over the long term.”

Babej highlighted a 13% year-on-year increase of $5.2 billion in net new inflows for the region in the first quarter. Citi’s private bank delivered the best quarter ever, with revenue up 2%, the memo said. Investment banking revenue surged 84%, driven by continued momentum in equity capital markets activities.

The bank didn’t break out numbers of its different Asia operations in its first-quarter earnings report. A Hong Kong-based spokesman at Citigroup confirmed content of the memo.

Citigroup announced plans to sell retail banking operations in 13 markets across the Asia-Pacific region, Europe and the Middle East as the lender forges ahead with plans to fine-tune its global branch network. The sales could fetch as much as $6 billion, people familiar with the plan said last week.

Overall, the bank’s Asia operations had $1.3 billion net income and $4.1 billion in revenue, contributing 21% globally. Electronic trading at its markets and securities services division increased significantly, with e-FX trading flows up 15%, the memo said.

The bank combined its private bank and wealth-management businesses in January under the leadership of Jim O’Donnell, head of global wealth division. The wealth franchise in Asia will now be led by Fabio Fontainha and Steven Lo, who currently lead the region’s retail-banking and private-banking units, respectively.

“Looking ahead, we have excellent momentum, a crisp strategy and tremendous opportunity across our region,” Babej said. “We also have a clear commitment to working through change and transformation.”

The bank this month announced plans to add $150 billion in client assets by 2025, building from the current $310 billion. It plans to hire 1,100 relationship managers and private bankers in Asia.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.