The sale marks the end of a remarkable experiment in global finance
T HE DILLY-DALLYING, to use the term put forward by Jane Fraser soon after taking over Citigroup in early 2021, is almost over. Outside America and a few international centres, the distinctive blue branches that were once common features of big cities around the world will soon be vestiges of another era, much like black, yellow and red Kodak signs. The New York-based bank, which built a reputation over decades as a global consumer giant, is in retreat. From now on it will focus primarily on commercial banking and wealth management, serving large and medium-sized businesses and millionaires. The retail branches it retains will mostly be concentrated in a few domestic markets, such as New York and California.
A series of announcements have already been made: in August the sale of the Australian retail operations to National Australia Bank; in October the wind-down of those in South Korea; in December the sale of its Philippine business to UnionBank of the Philippines; in January a disposal of Indonesian, Malaysian, Thai and Vietnamese branches to Singapore’s United Overseas Bank (UOB), whose chief executive, Wee Ee Cheong, remarked that in a single deal his institution had added what it had taken even Citi half a century to build; and, also in January, the sale of Citi’s consumer business in Taiwan to DBS, another Singaporean bank.
The remaining announcements are expected to come soon. One of the most important will be about India, where Citi has long had an outsized influence; Axis Bank, India’s third-largest private-sector lender, is rumoured to be close to picking up the business for around $2.5bn. Operations in China, Russia, Poland and Bahrain are still in play. Added to the disposal list recently has been the wholly owned Banamex, Mexico’s third-largest bank. Delay would only erode whatever value remains in these operations as employees and customers look for a stable home.
Citi’s retreat is not unique. HSBC, which came closest to having Citi-like global ambitions in retail banking, has pared back-though not as dramatically, at least in part because its core market, Hong Kong, is much smaller than Citi’s. Australia’s ANZ gave up on a pan-Asia strategy six years ago. Like Citi, these banks have kept offices around the world for corporate payday loan centers in Fort Madison business, from lending to treasury services.
As a result, it is tempting to view Citi’s retreat as just another failed attempt at world domination in consumer banking. But it differs from past failures in two respects: the sheer ambition behind the initial expansion, and the legacy it leaves in retail-banking markets around the world.
Important to Reed
The expansion was premised on rethinking global finance, with a vast network serving everyone, everywhere, in every way. As with many ambitious plans, Citi’s global push was in response to problems at home. In the 1970s, regulatory restraints resulted in a retail-branch network that was limited to New York City, unprofitable and unable to provide the funds Citi wanted for its lending business. While on holiday, John Reed, a senior executive, wrote a seven-page memo from the beach arguing that one option would be for Citi to dump retail banking altogether, a path later taken by Bankers Trust (now part of Deutsche Bank), Bank of New York and Boston’s State Street, among other institutions. The other option was to go very big.
Mr Reed posited that rather than thinking about retail banking as deposits and loans, Citi should answer the expansive financial needs of families, whatever they may be. Through success transfer, as the bank dubbed it, solutions developed in one market could be rolled out in others, creating economies of scale where they would not exist in a self-contained local institution. The bank came up with a clever slogan to fit: Citi Never Sleeps.