Overview of Citigroup’s Global Strategy
Over the past five years, Citigroup has been restructuring its international consumer banking franchise as part of CEO Jane Fraser’s strategy to transform the megabank into a leaner, simpler institution. This ongoing process has seen the bank systematically scale back its operations in various overseas markets, focusing instead on its core businesses.
The Case of Grupo Financiero Banamex
A significant step in this journey was announced recently, with the completion of the sale of a 25% stake in Grupo Financiero Banamex, Citigroup’s retail banking subsidiary in Mexico. This sale, to Mexican businessman Fernando Chico Pardo, represents a crucial part of Citigroup’s plan to deconsolidate and ultimately fully exit its holdings in Banamex.
Back in April 2021, a few weeks into her tenure as CEO, Fraser revealed plans to exit 13 international markets across Asia, Europe, the Middle East, and Africa. Mexico joined this list in 2022.
However, the bank’s restructuring is far from complete. Citigroup plans to conduct an initial public offering (IPO) of its remaining stake in Banamex and is in the process of exiting or winding down its retail operations in other markets like Korea, Poland, and Russia.
Understanding Citigroup’s Retreat from Seven Different Markets
In the following sections, we delve into how Citigroup has been navigating its retreat from international consumer banking in seven key markets.
Retreat from Mexico
The divestiture of Banamex, a leading bank in Mexico, has been one of the most complex processes in Citigroup’s restructuring plan. This is due to the dual approach of a direct sale followed by a future IPO. The bank has been waiting for the right market conditions to kick off the IPO process. In September, it announced plans to sell a 25% equity stake in Banamex to a company owned by Chico Pardo and his family.
Citigroup has a long history in Mexico, having conducted business in the country for over a century. Jane Fraser, who served as CEO of Citigroup Latin America from 2015 to 2019, has firsthand knowledge of the subsidiary.
Exit from Russia
Since 2022, Citigroup has been winding down its operations in Russia to reduce its exposure in the region. This decision was influenced by the geopolitical tensions following Russia’s invasion of Ukraine in February 2022, which caused significant disruption to international businesses, including banks.
Originally, Citigroup sought to sell its business in Russia. However, due to the complexity of the environment, it determined that a wind-down approach was more appropriate. As of mid-2022, the bank had 15 branches in Russia and employed about 2,300 people.
Scaling Down in Poland
Following Russia’s invasion of Ukraine, Citigroup temporarily halted its plans to exit retail banking in Poland. However, it later resumed its exit strategy and agreed to sell its consumer banking business, Citigroup Handlowy, to Velobank. This deal, expected to close by mid-2026, includes wealth management, micro-business banking, credit cards, consumer loans, deposits, and assets under management.
Departure from China
In China, Citigroup decided to wind down its consumer banking unit and explore sales of specific portfolios within the business, rather than opting for a straightforward sale. The wind-down process, which was announced in December 2022, is now nearly complete.
Exiting India
In India, Citigroup completed the $1.6 billion sale of its consumer business to Axis Bank Limited in March 2022. This move included the transfer of approximately 3,200 employees to Axis.
Withdrawal from Australia
In August 2021, Citigroup announced an agreement with National Australia Bank Limited to acquire Citigroup’s residential mortgages, deposits, and unsecured lending. The transaction, which closed in June 2022, was the first divestiture completed as part of Fraser’s market exit strategy.
Leaving the Philippines
In the Philippines, Citigroup announced an agreement to sell its retail business to Union Bank of the Philippines in December 2021. The deal, which closed eight months later, saw 1,450 Citigroup employees transferred to Union Bank.
This strategic retreat from various international markets allows Citigroup to reallocate resources towards higher-growth businesses. Despite these exits, the bank continues to operate institutional banking businesses in many of these markets, catering to corporations, banks, governments, and institutional investors.
Read more about Citigroup’s international consumer retreats Here.
