CITI Consolidating Its Business In India & Other Countries

Shyam Sewag
5 min readApr 17, 2021

CITI Consolidating Its Business In India & Other Countries

Citi Bank has decided to close down its consumer banking business in India and 12 other markets. This has been a big move and may have ripple effects in the banking sector. Therefore it is important to look at the reasons and understand why Citi is consolidating its business in India and other countries.

Citi has been one of the oldest foreign banks to provide financial services in India. It has brought a lot of revolutionary changes in the financial sector and proved to be strong competition for the public sector banks. Citi has established its roots in the commercial banking as well as wealth management sector. In this blog post, we will look at the history of its presence in India, the financial performance of the last 5 years, and the impact of this decision on consumers as well as the banking sector as a whole.

Here Are The Potential Reasons Why CITI Is Consolidating Its Business In India And Other Countries:

Citi’s History In India

Citi began operations in India over a century ago in 1902 in Kolkata. It has played a leading role in establishing important market intermediaries such as depositories, credit bureau, clearing, and payment institutions. Citi India added two more green-certified buildings to its office premises in 2012, and in 2013 moved its headquarters to The First International Financial Centre (FIFC), a world-class environmentally friendly building. In addition, Citi India, through its network of Citi Solution Centers, has been a leading offshoring unit for Citigroup globally, providing employment opportunities in the areas of technology, processing, analytics, and financial processes.

Moreover, Citi was the pioneer to penetrate the corporate sector and provide special accounts for salaried employees. This was a progressive move and as a result, we can observe every bank trying to capture as much corporate share as possible.

Banks like HDFC, ICICI, and Kotak Mahindra came after Citi has adopted the approach to gain more customer base from salaried employees. Not only that but looking at the tremendous growth in the initial phase the public sector banks also had to match up the quality standards. This competition proved to be beneficial for individual consumers in the long run.

Financial Performance Over The Years

For a banking giant like Citi was the financial performance a reason for this bold move? The numbers do not agree with that. The bank is not listed on the stock exchanges in India. Hence, the financial performance data is not available on many platforms. As a result, I had to look into the financial statements from the official website.

Here is a snapshot of the last 5 years performance:

From the data, it is evident that the branch was making sufficient profits. The problem, in this case, was that the majority of the profit is from the other businesses. Whereas profits from the consumer banking services were significantly less. Therefore, even after having a strong financial performance, Citi is consolidating its consumer banking business in India.

The Recent Turn Of Events

Jane Fraser who took over from her predecessor Michael Corbat in March 2021 has ensured that Citi’s legacy will be carried on even after the rough patch of a pandemic. She described the decision of closing the consumer business as a part of an effort to “double down” on wealth management. The decision has impacted 13 countries in total. These include India, Australia, Bahrain, China, Indonesia, Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand, and Vietnam.

The $900 (USD) Million Blunder: This is not the first time that the banking giant has made headlines. In August 2020, Citi erroneously paid an aggregate of approximately $894 million to lenders of Revlon. This amount was equal to the principal balance of the loan at that time. The main contributing factors were human error at Citi and at a third-party vendor, and limitations in Citi’s loan processing systems. After a careful assessment of the incident, Citi immediately put in additional controls to prevent similar loan disbursement errors in the future, while also embarking on a major upgrade of the loan infrastructure and controls.

As of February 26, 2021, $389.8 million had been repaid to Citi. In August 2020, Citi commenced litigation against certain fund managers of lenders that have not returned the remaining $504.2 million of erroneously transferred funds. On February 16, 2021, the court issued a judgment in favor of the defendants, which Citi intends to appeal.

Citi Consolidating Its Business In India: Impact Of The Decision

What is the impact of this decision? Will the consumers be left hanging with their accounts? What about the employees who were working in consumer banking?

As of now, the bank has said that there will be no change in the bank’s operations. They will continue to serve their clients and account holders with the same care. Moreover, the bank has clarified that it plans to sell off the consumer banking business.

This means that while Citi will continue to serve its account holders, for now, they would be serviced by the acquirer, once the sale concludes.

It is estimated that several mid-sized banks in India would be interested in buying Citi’s consumer banking business. While it could be tough to find a big buyer who can acquire the license in current times, the new buyer will also have to clear the fit and proper criteria of the Reserve Bank of India.

Opportunity For PSU And Other Private Banks

What opportunities this does move bring for the Public Sector Banks and other Private Banks? Citi Bank has been one of the leading foreign banks in the country. The bank will continue its wealth management business. But when it comes to the consumer side, it still has a lot to offer. Any bank which will look at acquiring Citi’s business will have a great upper edge in the financial sector. The acquirer gets Citibank credit card Programme which could be a value proposition in the acquisition deal. In addition, the Citi franchisee could interest many because of its high-quality SOPs (Standard Operating Processes), trained staff, and product development capabilities among others.

In the coming period, we might see SBI Cards, Kotak Mahindra, Axis Bank, ICICI Bank participate in the race to acquire Citi’s business. HDFC may have to fall behind due to the restrictions placed by the Reserve Bank of India (RBI) on acquiring fresh customers.



Shyam Sewag

Budding blogger. Interested in finance and global economic affairs.