Citi sells China wealth management business amid global consumer downturn

by MMC
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Citi Group (VS) is winding down another part of its consumer banking empire outside the United States, in the latest move by CEO Jane Fraser to simplify America’s third-largest bank.

The New York lender announced an agreement on Sunday evening to sell its consumer goods 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. As of late last year, Citi’s consumer bank in China employed 1,200 local workers, and HSBC plans to extend its offerings 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 in Australia, Malaysia, India and Taiwan.

Jane Fraser, CEO of Citi, speaks during the Milken Institute's 2022 Global Conference in Beverly Hills, California, U.S., May 2, 2022. REUTERS/Mike Blake

Jane Fraser, CEO of Citi. (Mike Blake/Reuters)

The bank plans to complete the sale of its consumer business in Indonesia before the end of 2023, a Citigroup spokesperson said.

“We are taking important steps in divesting our consumer banking business in China and continuing to make progress on our divestitures as part of our strategy to simplify Citi,” Titi Cole, head of Citi’s legacy franchises, said in a statement. communicated.

The withdrawal of consumers from some parts of the world is part of a broader reorganization underway at Citigroup, as Fraser hopes to improve the bank’s profitability and revive its stock price, which has lagged its peers for years. years.

Citigroup was down more than 1% Monday morning. Since the start of 2023, the stock has fallen by more than 11%, reaching its lowest price in three years last Tuesday.

The KBW Nasdaq banking index is up 0.85% on the day. Since the start of the year, it has fallen 25%.

In September, Fraser outlined a company-wide reorganization that she called the “most consequential” change to how Citi has operated in nearly two decades. The reorganization aims to eliminate decades of corporate plethora within the big bank by dividing its operations into five separate units, each of whose leaders report directly to Fraser.

She described the move as Citi’s “big next step” after its decision to shed its former consumer business.

The reorganization should eliminate middle managers which no longer fit into the bank’s five newly created activities. Citi did not disclose planned layoffs or expenses related to the move, although Fraser made clear the change would result in reductions of the bank’s 240,000 employees.

“We will say goodbye to some very talented and hard-working colleagues,” Fraser wrote in a September memo.

During the first half of 2023, Citigroup laid off 5,000 employees, the bank announced in July. A Citi spokesperson said the bank would provide an update on its sweeping reorganization when it reports third-quarter results on Friday.

Actual figures on the reductions, however, will not be available until early next year. For the quarter, the bank is expected to report a net profit margin less than half that of its peers, according to analyst consensus estimates compiled by Bloomberg.

David Hollerith is a senior reporter for Yahoo Finance, specializing in banking and cryptocurrencies.

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