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Citigroup to focus on corporate and institutional banking business in India


Citibank will shut its India retail banking business, which includes credit cards, savings bank accounts and personal loans, as part of a global decision to exit 13 markets as the US-based lender focuses on a few wealthy regions around the world.

Citi started retail operations in India in 1985 and was among the pioneers of credit cards in the country. It will focus on corporate and institutional banking business in the country as part of a strategic rethink, CEO Jane Fraser said in a press statement after the bank announced its 2020 results.

The bank will exit consumer operations in Australia, Bahrain, China, India, Indonesia, Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam. Fraser said that the plan going forward is to concentrate on consumer banking, apart from the US, in four wealthy markets–Singapore, Hong Kong, the United Arab Emirates (UAE) and London.

“As a result of the ongoing refresh of our strategy, we have decided that we are going to double down on wealth,” Fraser said in the release. The move to focus on the remaining markets “positions us to capture the strong growth and attractive returns the wealth management business offers through these important hubs.”

Citi’s total assets In India at the end of FY20, including credit extended to Indian institutional clients from offshore Citi entities, stood at Rs 2.99 crore.

“The consumer banking business, which includes cards and loans against property, would be around Rs 32,000 crore,” said a person with knowledge of the bank’s activities in India. “They also have a huge amount of savings accounts built over the last few years, which has a lucrative liability book and also credit cards, which they were the largest among foreign banks in India.”

The bank also had Rs 27,911 crore of loans to agriculture, affordable housing, renewable energy and micro, small and medium enterprises (MSMEs). Of this, Rs 4,975 crore was to weaker sections, as part of Citi India’s priority sector lending obligations, results released last year showed.

Outstanding credit cards as of February stood at 2.65 million, the largest among foreign banks in India, ahead of 1.46 million by Standard Chartered and 1.56 million by Amex. Citi India had 2.9 million retail customers with 1.2 million bank accounts as of March 2020.

At the end of March 2020 Citibank served 2.9 million retail customers with 1.2 million bank accounts and 2.2 million credit card accounts. It claimed a 6% market share of retail credit card spends in the country with average spends per card is 1.4 times higher than the industry average, making it a profitable business for the bank in India. It also has the largest wealth management business among foreign banks which is also likely to be put on the block as part of the new strategy.

Piyush Singh, head financial services, Asia Pacific and Latin America said Citi’s decision to exit these markets is an impact of the accelerated disruption caused by the Covid 19 pandemic which has forced large banks to refocus management bandwidth and capital across the globe.

“If you want to be in retail in India you have to be all in or not be there at all. The disruption caused by Covid-19 has forced everyone to realign their strategy because not everyone can build a localised retail model especially in India where phyigital is the way to go but there is tough competition from new lenders like Bandhan and IDFC First and also small finance banks,” Singh said.

Citibank could sell its retail business in parts or as a whole with suitors ranging from local new and established lenders like Kotak Mahindra,

, IDFC First or even foreign banks like DBS Bank.

DBS Bank is considered one of the potential buyers of these businesses given its deep pockets and ambitions to expand in India. In November last year the Singaporean lender completed the first of its kind RBI directed acquisition of a distressed lender taking control of Chennai based Lakshmi Vilas Bank (LVB). It has already infused more than $1 billion into India in its relatively new existence in the country and though LVB gives its wider access to South India, it may look at Citi’s credit card portfolio to kick start that business in India. DBS does not offer credit cards in the country currently.

Local lenders have profited from foreign banks’ exit from India over the last decade. IndusInd Bank for example brought and built up Deutsche Bank’s credit card portfolio in 2011 and followed it up by buying Royal Bank of Scotland’s (RBS) diamond financing business in 2015. Another private sector RBL Bank also started its credit card business by purchasing the portfolio from RBS in 2013.

Citi employed 19,235 as of March 2020, a large chunk of them in retail banking. It is unclear how many of the jobs will be lost. Citi like its foreign banking peers also has service centres in India under Citicorp Services India Private Limited (CSIPL) which employed 13,964 professionals across five locations.

India CEO Ashu Khullar said the change in strategy will help the bank Citi strengthen its ability to service large corporate and institutional clients.

“We will continue to deliver our innovative digital solutions, backed by our global network, and devote our resources to large and mid-sized Indian corporates and multinationals, financial institutions, start-ups in the new age sectors, amongst others. India is a strategic talent hub for Citi. We will continue to tap into the rich talent pool available here to continue to grow our five Citi solution centers which support our global footprint. There is no immediate change to our operations and no immediate impact to our colleagues as a result of this announcement,” he said in a statement.

Results released in August 2020 showed the bank made a net profit of Rs 4912 crore in the year ended March 2020 up 17% from Rs 4185 crore a year. Net NPA inched up to 0.60% from 0.50% in March 2019. CASA ratio dropped to 55.8% in March 2020 from 60.3% while capital adequacy ratio dropped to 15.90% from 16.50% a year earlier.

The bank held a 5.87% market share in digital Payments and 8.25% of India’s merchandise and software services trade flows as of March 2020.



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