Citigroup is planning to shutter its UK retail bank to focus on its wealthiest customers as the US lender overhauls its international business structure.
Citi on Wednesday said it would invite its wealthy clients in the UK to transition to its private bank in order to wind down its retail business. Customers not eligible for the higher-end service will have their accounts closed.
The move out of retail banking in the UK comes as Wall St rivals increase their own offerings. JPMorgan and Goldman Sachs have launched digital banks in the UK in recent years in a bet that they can make money serving international consumers without the costs of maintaining a branch network.
“Citi has begun the process of collectively consulting with employees of its UK retail bank in more detail about the proposal,” Citi said. “No final decision can be taken until that process concludes.”
The “overwhelming majority of clients would not be affected until 2023”, the bank added. Citi’s UK business was made up of a single branch, located in its European headquarters in Canary Wharf.
Citi has already scrapped its global consumer banking division as part of chief executive Jane Fraser’s retreat from international retail banking.
Fraser announced her intentions to exit retail banking entirely in 13 markets across Asia and Europe last year. In January, the bank also put its Mexican consumer business up for sale.
She plans to redeploy capital freed up to higher returning businesses, such as wealth and transaction banking, and focus the group’s international consumer business on wealth management in four hubs: Singapore, Hong Kong, the United Arab Emirates and London.
If the plan to exit UK retail is implemented as planned, Citi said it will not have a material impact on earnings.
The bank did not attempt to sell the UK business, given its small size, and similar proposals are not being considered in the remaining wealth hubs that have larger retail operations, said a person familiar with the plans.
Citi’s retreat to its domestic market follows a broader pullback by other large lenders that attempted to assemble a global consumer banking network. Over the past two years European groups HSBC, BBVA and BNP Paribas have exited US retail businesses, ending attempts to build full-service banks in the country.
Bank executives have said disparate regulatory regimes and cultural differences across regions made it difficult to efficiently run a global consumer network.
Source: Financial Times