Citibank India has now put on sale its retail banking business which includes advances totalling Rs 66,507 crore and deposits worth Rs 1,57,869 crore. And aslo exits from 13 Global Consumer Banking Markets
The American banking Giant company, Citigroup, which is the leading foreign bank, on Thursday decided to leave the consumer buying business in India, china and 13 global consuming markets as part of a global strategy to focus on institutional businesses. Citibank India has now started selling its own banking business which includes development worth Rs 66,507 and a deposit of R1.57,869 million.
The US giant will not sell its wealth management and corporate banking business. It will sell through sales accounts and credit cards, and indicate that there will be no retrenchment or closure of offices in India. Citibank India, which came into operation here in 1902, serves 2.9 million customers, 1.2 million bank accounts and 2.2 million credit card accounts, and a market share of almost six percent of the nation's credit cards used. It made the idea of credit cards and ATMs popular in India in the 80s.
Citigroup chief executive Jane Fraser said on Thursday the bank would move out of thirteen international consumer markets, including India and China, shifting its focus to asset management and moving away from commercial banks in areas where it is limited. Citigroup will focus on its global consumer business in four markets: Singapore, Hong Kong, London and the UAE.
Ashu Khullar, CEO, Citi India, said, “There is no immediate change in our operations and it has no immediate impact on our partners as a result of this announcement. In the meantime, we will continue to provide our clients with the care, compassion and dedication we do today. ”At the Citi franchise in India (Citi) has been consolidated, assets in general, including credit to Indian institution customers from Citi coastal companies, as on March 31, 2020, was Rs 2,99,250 crore.
“Citi does not close consumer businesses in India. However, the plan is to sell through this business. There will be no retrenchment or closure of offices. We will focus on the institutional business, ”said the bank's chief executive.
While growing consumer banking business was a problem, profits were not a problem for the bank as it reported a total profit of Rs 9,918 million for the year ended March 2020. Most of the profits, however, came from another bank for revenue. While its profits on the sale of exchanges amounted to Rs 2,334 crore in FY20, the bank received 1,727 crore in commissions, exchanges and brokerages during the year.
Regarding the big question of who will buy the retail business at the bank, the insiders in the industry point to a variety of categories. Many feel that since it will be difficult to find a major buyer who will be licensed in modern times, the new buyer will have to cancel and reserve the appropriate and appropriate policies of the Reserve Bank of India. The most likely option seems to be a ‘Sum of the Parts’ rating where business components can be independently represented and taken up by interested parties. Therefore, if a bank is interested in Citi's securities business, it can go to that and anyone who is interested in the card business, can do so.
“The potential recipients could be foreign banks seeking to enter India. But most of the major products of commercial banks already exist in the country. Another option would be for Citibank to sell the banking business to India, and if the acquirer has no interest in the entire consumer business, it could be sold as part of a variety of players, ”said Shinath Sridharan, BFSI chief executive and independent market analyst.
The Citibank credit card program can be an important proposal throughout M&A. There are some who feel that the Citi franchisee can attract many because of its high SOPs, trained staff and product development skills among others. One banker who did not want to be named said, "Citi India is entitled to a fair amount of money from any medium-sized Indian bank to look for growth."
Some feel that the reason for selling the consumer banking business is that the profitability of the consumer banking business has been depressed and a lot of money is needed to run that business. "Citibank could not measure the right to sell to consumers in India as it did not 'get sick' quickly enough," said one bank employee.
Concerning its business to be maintained by Citi, Khullar said, “Citi has been a major center in India and the strategic plan announced today will strengthen our ability to bring Citi's full global power to our institutional customers, strengthening our leadership positions in business, commerce and investment, financial and commercial solutions. and security services. ”Citi's commercial banking unit serves more than 3,000 customers.
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