Citigroup Inc to dump consumer banking in 11 markets: reports
15 October 2014
Citigroup Inc said it was pulling out of consumer banking in 11 markets, including Japan and Egypt, as the US bank with the biggest international business, looked to cut persistently-high costs, Reuters reported.
The third-largest US bank, built through a series of acquisitions spanning back to the 1980s, had been trying to scale down operations after the financial crisis in order to emerge as profitable as rivals and had shed hundreds of billions of dollars of bad assets in the process.
The latest exits were the result of studies the lender started in early 2012 to figure out which countries were not profitable enough for retail banking.
It took a long time to start getting results, due partly to the bank not having standardised accounting systems across all countries to compare the units' profitability, Reuters reported having been told by sources familiar with the matter, in 2013.
According to a spokesman for Citigroup, the sources' comments were false, and the bank had long had systems in place to consistently measure profitability across businesses and geography.
The deliberate pace at which chief executive officer Michael Corbat was fixing its business underscored how hard it was to fix a business as sprawling as Citigroup, which operated across over 100 countries.
According to Corbat who spoke to analysts, in shedding the poorly performing businesses the company was also taking a valuable step toward reducing complexity.
Meanwhile, Citigroup Inc co-president Manuel Medina-Mora had been telling colleagues that he was close to retiring as the Mexican unit he helped build fought fraud allegations, Bloomberg reported citing a source.
Banamex, the Mexican division that had been held up as an example of profitable banking business at Citigroup, had suffered this year from fraud accusations, including one disclosed yesterday. The unit's CEO, Javier Arrigunaga, resigned this month ''in light of the difficult challenges our franchise in Mexico has faced over the past year,'' Medina-Mora said in a 3 October statement.
Corbat, who yesterday termed a fraud discovered in Mexico as ''appalling,'' respected Medina-Mora and the business he developed, according to the Bloomberg source. Medina-Mora would turn 65 in August, and his retirement at that age would not come as a shock, the source told Bloomberg.