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Citi Sells its Consumer Banking Business in India

Industry: Financial Services
Current: Company Performance

Citibank sold its consumer banking assets and business to Axis Bank for about $1.6 billion
Citibank expects to release approximately $800 million of allocated tangible equity following the completion of the deal
Citibank has been in talks to sell its consumer business in 13 countries in APAC and Europe regions

Citi Sells its Consumer Banking Business in India

On March 20, 2022, Axis Bank entered into an agreement with Citibank to acquire Citibank’s consumer businesses, which cover credit cards, loans, retail banking, and wealth management operations in India. Axis Bank will acquire Citibank’s consumer business for $1.6 billion and following the completion of the deal, Citi expects the release of approximately $800 million of allocated tangible equity.

Why the sale of consumer business?

The US banking group offers services such as wealth management business, commercial banking business, treasury and trade solutions, and securities services. However, in 2017, Citibank announced that it would invest its resources in sectors that offer high returns such as wealth management and sell off their moderately performing sectors. In order to bring about this strategic change in its banking business, Citibank would close its consumer banking operations in 13 markets across Asia, Europe, and the Middle East. The bank’s exit from its consumer franchises is likely to result in the release of approximately US$7 billion of allocated tangible common equity after deals in all these 13 markets are finalized and regulatory obligations completed.

Citibank categorizes its revenue into two major segments: International Clients Group (ICG) and Global Consumer Banking. ICG includes the securities market, banking for high-net-worth clients, corporate, institutions, and the public sector. Consumer banking consists of retail banking, consumer loans, and retail services. As evident from the chart above, the consumer banking segment has reported little or no growth in the past as opposed to the ICG segment, which has shown significant growth and a sizeable market ready to be capitalized on. Consequently, Citibank planned the strategic shift to target affluent consumers in the ultra-high net worth segment. The bank dealt with these customers as a commercial bank but now aims at serving this largely untapped segment by investing more in its wealth management businesses.

Citibank enroute to streamlining its business

Australia: In August 2021, Citibank entered into an agreement with National Australia Bank to sell its consumer business for approximately $883 million.

South Korea: In October 2021, after failed attempts at selling its consumer banking in the country, Citibank decided to permanently shut its consumer banking operations in South Korea.

Philippines: In December 2021, Citibank agreed to sell its consumer banking assets and business to the Union Bank of the Philippines for around $904 million.

Indonesia, Malaysia, Thailand, and Vietnam: Citibank sold off its consumer business in Malaysia, Indonesia, Thailand, and Vietnam to the UOB Group for about $3.7 billion in January 2022.

With the successful selloff of its cost-heavy and low-return business segments such as consumer banking business in 13 countries across the APAC and Europe, Citibank considers targeting the ICG segment and divert these resources to its prioritized sector i.e., wealth management. It also aims at operating its wealth management segment from these four regions: Hong Kong, London, Singapore, and the United Arab Emirates. It remains to be seen how this decision affects the US banking giant since many rivals are entering the same major markets that Citibank has exited in recent times.

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