Citigroup Inc. is reportedly finalizing a deal to sell its consumer-wealth business in China to HSBC Plc. This move comes as part of Citigroup’s ongoing efforts to scale back its overseas retail banking business. The deal is expected to be announced as early as next month.
The deal will include a unit within Citigroup that employs around 400 people and manages approximately $3 billion to $4 billion in assets. The unit caters to retail-wealth customers who have between $100,000 to $1 million in assets.
Citigroup has been actively divesting its overseas consumer businesses. This includes an upcoming initial public offering of Banamex in Mexico. On the other hand, HSBC Holdings Plc has expressed plans to invest $3.5 billion by 2026 in its Asian wealth business. The bank’s Pinnacle unit has already recruited approximately 1,400 wealth managers in China.
The reports of the potential deal between Citigroup and HSBC were initially made by Reuters and were later confirmed by unnamed sources cited by the Wall Street Journal.
Citi’s Restructuring Plan
As part of its ongoing restructuring efforts, Citigroup recently announced plans to simplify its structure. This includes eliminating its personal-banking and wealth-management layer, as well as its institutional-clients group. Additionally, the bank will remove regional layers in various markets, such as Asia-Pacific, Europe, the Middle East, Africa, and Latin America.
Citigroup has also announced the leaders of its five main business units. Shahmir Khaliq will head services, Andrew Morton will lead markets, Peter Babej will serve as interim head of banking, Andy Sieg will lead wealth management, and Gonzalo Luchetti will head U.S. personal banking.
Focus on Strategic Markets
Citigroup has already signed sales agreements for nine of the 14 retail banking markets it plans to exit. This includes markets such as Taiwan, Australia, India, the Philippines, Thailand, and Vietnam. The bank is shifting its focus towards wealth management and commercial banking in its international business.
Regulatory Capital Benefit
The sale of Citigroup’s Taiwan consumer business to DBS Bank of Singapore will result in a regulatory capital benefit of $1.2 billion, according to the bank’s statement on Aug. 14.
Further Restructuring Considered
Reports suggest that Citigroup is considering further reorganization under CEO Jane Fraser. However, details about these potential changes have not been disclosed.
Reuters Wall Street Journal