CitiBank To Exit Consumer Banking In India: All You Need To Know
No immediate service disruptions expected as it will continue to serve all its existing customers
Citibank is likely to exit its retail banking business in India by selling its stake, according to news reports. This is in line with the bank's announcement to exit retail banking in the country, along with 12 other such markets in Asia and EMEA (Europe, Middle East and Africa), in a pivot towards institutional and wholesale banking.
Citi's CEO, Jane Fraser, said in a call on the bank's first quarter earning that it is announcing strategic actions in its Global Consumer Banking - to divert capital and investment where it has the most growth potential. Its Global Consumer Banking presence in Asia and EMEA would be focused only on four locations - Singapore, UAE, Hong Kong and London.
"As a result, Citi intends to pursue exits from its consumer franchises in thirteen markets across the two regions. This shift is not being attributed to any financial angles, but rather to the bank's overall strategy", said the bank.
"The affected businesses include the consumer franchises in Australia, Bahrain, China, India, Indonesia, Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam," it adds, where the bank believes it lacks the scale to compete.
What It Means For Existing Customers
But this move is unlikely to impact its customers in India. Commentary from Citibank India suggests that there will be no immediate service disruptions faced by its customers as it will continue to serve them for the time being.
It's India CEO, Ashu Khullar has said, "Citi has been a deeply imbedded institution in India and the sharpened strategy announced today will strengthen our ability to bring the full global power of Citi to our institutional clients, reinforcing our leading positions across Corporate, Commercial and Investment Banking, Treasury and Trade Solutions, as well as Markets and Securities Services."
Further, he added that there would no loss of jobs or no immediate change in its operation due to this announcement.
A spokesperson from the banks also told CNBC-TV 18 that if a customer chooses to open a new account or obtain a new credit credit card, the bank would still do it.
Presence of Citi retail in India
Data from the Reserve Bank of India show that Citi has nearly 2.65 million (26.5 lakh) credit card consumers in India, with a nearly 4.3% share of the market measured in the number of cards outstanding as of February 2021.
However, this is a far cry from the market leader in this segment, HDFC Bank, who in the same month has nearly nearly 15.2 million (1.52 crores) customers and a share of nearly 24.65%. HDFC Bank is temporarily prohibited from issuing credit cards by the RBI as a penalty of experiencing frequent online outages.
Further, the bank has business from 1.2 million bank accounts as per March 2020. The bank has a balance sheet of ₹2.18 lakh crore as of end of March 2020, and ₹1.58 lakh crores of deposits across demand, saving bank and term deposits, according to its public financials.
Other banks exiting India
Citibank will not be the first foreign bank to scale down its operations in India.
In 2013, Ratnakar Bank Limited (RBL Bank) bought three businesses - mortgages, credit cards, and business banking - from the Royal Bank of Scotland for an undisclosed sum.
In the same year, IndusInd Bank purchased Deutsche Bank's credit card business - almost 2 lakh customers for ₹224 crores.
HSBC, Morgan Stanley, Bank of America - Meryll Lynch and Standard Chartered too have scaled back their businesses in India or sold part of their portfolios over the last couple of decades.
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