American banking giant Citi, one of the oldest foreign banks in the Philippines, is bowing out of the local consumer and retail banking business as part of a global downsizing program.
This means that Citi will give up its local credit card business, retail deposit-taking, asset management and lending to individuals and households. These account for a good chunk of Citi’s existing business in the country but they are also the segments where Citi has to contend with cutthroat competition, especially with big domestic banks that have a wider distribution footprint.
Citi announced its plan to exit its consumer franchises in 13 jurisdictions: Australia, Bahrain, China, India, Indonesia, Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam. It will keep only the institutional businesses in these markets.
This is part of a plan to direct investments and resources to the businesses where it has the “greatest scale and growth potential.” Citi will henceforth focus its global consumer bank presence in Asia and Europe, Middle East and Africa (EMEA) on four wealth centers—Singapore, Hong Kong, the UAE and London. “
Institutional business
“There is tremendous opportunity with this strategy refresh by Citi for us to offer a uniquely differentiated value proposition to our clients as we move into a new phase of growth and transformation focusing on our institutional franchise,” Citi Philippines CEO and country officer Aftab Ahmed said in a statement.
“There is no immediate change to our operations, and no immediate impact to our colleagues as a result of this announcement. In the interim, we will continue to serve our clients with the same care, empathy and dedication as we do today,” Ahmed said.
Opportunities for others
It remains to be seen whether Citi will sell the portfolio in individual markets or as part of a bundle with assets in other markets. In any case, it presents an opportunity for other interested players to acquire a consumer banking franchise that has been honed for over a century. In recent years, many local banks have moved more aggressively into the consumer business, which offers higher margins in exchange for higher risk-taking.
“Citi, which has been here for over 100 years, has a terrific retail and consumer business in the Philippines. It is a well-managed business with a significant customer base. Citi’s rationalization plans in the Philippines could represent growth opportunities for other market participants,” said Cezar Consing, president of Bank of the Philippine Islands and former president of the Bankers Association of the Philippines.
As of end-2020, Citi was the 12th largest universal bank in the country with P331.32 billion in total assets. It had a P153.75-billion loan book and P215 billion in deposit base.
Citi, which established its Philippine banking operations in 1902, will henceforth focus on its institutional business. To date, the bank serves over 950 multinational corporations and over 100 top local corporations. It also serves 90 percent of the country’s 20 most valuable companies in the stock market. In the last 12 months, it has raised over $20 billion from global capital markets for Philippine clients. INQ