Russian President Vladimir Putin Allows Citi to Sell Russia Arm to Renaissance Capital
Russian President Vladimir Putin has given the green light for Citi to sell its Russia arm to investment bank Renaissance Capital, as per official documents. This move marks a significant development in Citi’s strategic reorganization.
The Wall Street bank is swiftly progressing towards finalizing the transition of its operations to the buyer and securing the requisite approvals. A Citi spokesperson mentioned in a statement to Banking Dive that they are pleased with Putin’s approval of the sale.
Citi’s Exit Strategy from Russia
In April 2021, Citi announced its decision to exit its consumer business in Russia, part of its plan to withdraw from 13 international retail markets. However, following the Russia-Ukraine conflict and the subsequent U.S. sanctions, Citi expanded its plans to include the sale of its commercial operations in Russia as well.
“Citi ceased nearly all institutional banking services in Russia by March 31, 2023,” stated a Citi spokesperson to Yahoo! Finance. The bank now focuses solely on fulfilling legal obligations as it winds down its Russian business.
Citi’s Global Restructuring Efforts
Of the 13 consumer markets targeted for exit in 2021, Citi has successfully withdrawn from several countries, including Australia, Bahrain, India, Indonesia, Malaysia, the Philippines, Taiwan, Thailand, and Vietnam. The bank is currently winding down its operations in China, South Korea, and Russia, with the pending sale of its Poland arm to VeloBank.
Furthermore, Citi added Mexico to its list of consumer banks to offload in 2022. After proposing to sell a 25% stake to Fernando Chico Pardo, the bank plans to pursue an initial public offering for the remainder of its Mexican operations.
Financial Outlook and Analyst Views
According to a securities filing, Citi had $11.7 billion in client exposure to Russia by September’s end, primarily consisting of corporate dividends held due to Russian government restrictions. Analyst Mike Mayo from Wells Fargo projects Citi’s restructuring progress to enhance return on tangible common equity in the coming years.
Mayo anticipates a gradual improvement in financial performance, with Citi’s revenue growth demonstrating a positive trend. The bank’s restructuring efforts are aimed at narrowing the gap to peer institutions and fostering sustainable growth.
