New CEO Seeking to Simplify Overseas Operations
Citigroup Inc. is reportedly considering withdrawing from the retail banking markets of Asia-Pacific countries including South Korea, Thailand, the Philippines and Australia.
Bloomberg reported on Feb. 19 that the U.S. banking giant is studying options for slimming down the firm’s sprawling international consumer operations as part of incoming Chief Executive Officer Jane Fraser’s efforts to simplify the bank.
It said that nothing has yet been decided, adding that the current sales system can be maintained as it is, and even if the withdrawal is determined, it will be carried out in a phased manner.
Citibank Korea seems to be focusing on wealth management (WM) rather than retail banking. Its branches have already been drastically cut. At the end of 2016, Citibank Korea had 133 branches. Currently, the number has shrunk to 39. SC First Bank, another foreign bank in Korea, had 212 branches as of the end of June 2020.
Citigroup's move is deeply related to new CEO Jane Fraser. She said in a conference call last month that the group is studying which business sector can lead the market amid the rapid digitization of the world. Fraser recently became the first female CEO in Citigroup's history.
Rumors of Citibank's withdrawal from Korea have surfaced every three years since 2014. Rumors of its withdrawal spread when a large-scale store merger program and voluntary retirements were carried out in June 2014. At the time, newly appointed bank president Park Jin-hoe had to come forward to calm the rumors. When Citibank said it would shut down 101 of its 133 branches in 2017, some analysts said that the bank was trying to pull out of Korea.
In 2018, Citibank's net profit jumped 26.1 percent from the previous year to 307.4 billion won. But it fell 9.1 percent to 279.4 billion won in 2019, and plunged 38 percent to 161.1 billion won by the third quarter of 2020.
"The Korean government will be embarrassed if Citigroup decides to leave Korea. It served as a financial U.S. Forces in Korea (USFK) during the financial crisis in 2008 by helping the United States and Korea sign a currency swap," said a financial industry insider.