Citigroup to exit retail banking in Korea, likely to transfer credit card operation

Citigroup Inc., an American multinational banking giant, is existing retail banking business including credit card servicing from South Korea as part of its broad reorganization plan to trim consumer-banking operations in Asia,

Citigroup announced Thursday (U.S. local time) that it will fold consumer banking in 13 countries in Asia, Europe and the Middle East including Korea as part of its strategic restructuring to focus on wealth management and investment banking. It will, however, continue to operate consumer banking in four countries in those regions – Hong Kong, Singapore, the United Arab Emirates, and London with high expectations for growth in wealth management.

In Korea, tough regulations, mushroomed financial sector with the sprawling fintech and online lenders and protracted low-interest environment are believed to have led one of the longest lasting foreign bank names in Korea to pack out.

Citi entered in 1967 and launched Citibank Korea in 2004 after taking over KorAm Bank. It has slashed the number of branches across the country from 129 to 39 in the face of rising online and mobile banking in 2017, prompting speculation its exit from Korea.

“Citigroup has focused on the Korean market since it opened its first branch in 1967 and launched Citibank Korea in 2004,” said its CEO Yoo Myung-soon. “We will restructure our business to focus on corporate banking and prioritize consumer support in the process.”

Citibank Korea posted a 32.8 percent plunge in net profit in 2020 to 187.8 billion won ($168.1 million) from 279.4 billion won a year ago. Net income in the retail banking business halved annually over the last couple of years, from 72.1 billion won in 2018 to 36.5 billion won in 2019 and 14.8 billion won in 2020.

Citibank Korea’s consumer banking worth 17 trillion won accounts for 2.7 percent in the entire Korean retail banking industry to have limited impact in the Korean market, expected experts.

Citi card use last year totaled 6.8 trillion won, less than 1 percent of total credit card spending of 705.3 trillion won in Korea. The business is expected to be transferred to another credit card issuer as sale would take longer and be complicated.

Its withdrawal would inevitably lead to a layoff as its retail banking unit takes up about half of its operation in Korea. As of last year, there were 939 workers at the retail banking sector out of its total 3,500 employees.

The nation’s financial authorities said they would discuss necessary measures to minimize consumer inconvenience, ensure job security and protect customer data. Citibank Korea said it will make notice of the results of discussion with the authorities and take necessary steps after having sincere talks with related people.

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