Citibank Korea's consumer operations to end, no buyer found

Citibank Korea is winding down consumer operations in Korea after failing to find a buyer for the business.

Citibank Korea headquarters in Seoul [CITIBANK KOREA]

Citibank Korea is winding down consumer operations in Korea after failing to find a buyer for the business.

"The decision was made after a comprehensive review of all offers," the bank said in a statement Monday following a vote by the board.

The bank was hoping to sell the operation complete with employees after New York’s Citigroup announced in April plans to cease consumer banking in 13 markets including Korea.

The high cost of maintaining the staff was one of the obstacles to the sale of the Korean business to another bank or to an investor.

The issue now is for the bank to minimize impact on clients and employees.

Services based on existing contracts, including loans, time deposits and credit cards, will be offered without interruption until the contract expires or clients terminate those contracts.

The bank said that early redemption charges on all loans will be waived from Nov. 1.

New sales of consumer banking products will be suspended. The bank said it will release more details regarding its banking products, including the date for stopping new sales, soon in a separate announcement.

Until further information is provided, consumer services offered through branches, mobile apps, call centers and automated teller machines will be maintained.

"We will work closely with regulators and comply with the applicable laws, regulations and procedures during the process to ensure minimal inconvenience for clients," the bank said in a statement.

For employees, the bank is offering an early retirement package.

Last Saturday, management and labor agreed to an early retirement package of 100 percent of annual salary for workers for remaining working years until retirement, with the ceiling set at 700 million won ($599,000).

The bank said it will "also seek to offer alternative employment opportunities for those employees who wish to continue to work at Citibank Korea."

Citibank Korea is not completely pulling out of Korea as the bank will still offer corporate banking services in the country.

The union, though agreeing with terms of the early retirement package, argued against the bank's decision to wind down its consumer banking business.

"We will resist by every conceivable means to block the bank from exiting in haste," the union said in a statement Monday.

The union insisted that the bank should try to sell the business unit again when market conditions improve to ensure job security for some 2,500 workers.

The union also asked the Financial Services Commission (FSC) not to approve the bank’s closing of the business.

Local banks are obliged to obtain approval from the financial regulator to close businesses. The FSC is looking into whether the bank is legally mandated to obtain approval for closing only a part of its business.

The FSC released a statement on Monday saying that it will closely monitor the winding down process and that it delivered a notice to the bank on Friday that it can order the bank to submit plans to protect rights of consumers and employees should it wind down its retail banking business.

If Citibank Korea exits consumer banking, Standard Chartered Bank Korea will be the only foreign bank to offer consumer banking in Korea.

Citibank Korea's business has been faltering over the years. Its net income plummeted by 36.26 percent to 187.5 billion won in 2020.

In the first half of this year, its net income dropped 11 percent on-year to 80.1 billion won.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]