Citigroup Inc. has officially confirmed the sale of its consumer-wealth portfolio in China to HSBC Plc. This move comes in line with Citigroup’s previously announced plans to exit the consumer business by December 2022.
Despite the sale, Citigroup will continue to operate its institutional banking business in China, serving over 300 established companies and startups. The bank will also cater to ultra-high-net-worth clients through its regional wealth hubs located in Hong Kong and Singapore, leveraging its Citi Private Bank and International Private Bank units.
Following the weekend attack in Israel’s West Bank by Hamas, global equity markets experienced turbulence, leading to a 1% decline in Citigroup’s premarket trades.
Although the financial details of the consumer-wealth deal were not disclosed, Citigroup stated that it encompasses a total of $3.6 billion in deposits and investment assets under management. The transaction is anticipated to be finalized in the first half of 2024.
As part of the deal, HSBC will extend employment offers to the 400 individuals currently employed by Citigroup within the consumer-wealth division.
Titi Cole, Citi’s head of legacy franchises, and Christine Lam, Citi China Country Officer and president of Citibank (China) Co. Ltd., spearheaded the negotiations on behalf of Citigroup.
Citigroup has a long-standing presence in China since its establishment in 1902. Its recent decision to scale back its overseas retail banking business has led to the divestment of various consumer businesses, including the upcoming initial public offering of Banamex in Mexico.
HSBC’s Plans for Asian Wealth Business
HSBC Holdings Plc has recently announced its plans to invest a staggering $3.5 billion by 2026 for the growth and development of its Asian wealth business. As a part of this expansion, HSBC has successfully recruited approximately 1,400 wealth managers in China through its Pinnacle unit.
Citi’s Strategic Decisions and Market Exits
Reuters initially reported Citi’s China consumer-bank deal last month, which has been further confirmed by anonymous sources speaking to the Wall Street Journal. As a result, Citi has currently exited from eight out of its 14 markets, namely Australia, Bahrain, India, Malaysia, the Philippines, Taiwan, Thailand, and Vietnam. Indonesia is expected to be the next market Citi will exit later in 2023, with plans in motion to wind down its operations in Korea and Russia.
Streamlining Citi’s Structure
Citi has recently announced its intention to simplify its structure by eliminating its personal-banking and wealth-management layer, along with its institutional-clients group. Additionally, regional layers in the Asia-Pacific region, Europe, the Middle East and Africa, and Latin America will also be phased out as Citi exits these businesses.
Leadership Changes at Citi
Citi has appointed leaders for its five main business units. Shahmir Khaliq will oversee services, Andrew Morton will handle markets, Peter Babej has been appointed as the interim head of banking, Andy Sieg will lead the wealth division, and Gonzalo Luchetti will take charge of U.S. personal banking.
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