Citigroup ditches global consumer banking division after 20 years

Citigroup is scrapping its global consumer banking division, overhauling its business structure to reflect chief executive Jane Fraser’s retreat from international retail banking.

Starting this year, Citigroup will report results from personal banking in the US and global wealth management, dropping the global consumer bank line that has featured in its earnings releases in every quarter since 1999.

The restructuring was announced alongside higher-than-expected fourth-quarter earnings, and only hours after Citigroup said it was selling four consumer banking franchises in south-east Asia to Singapore’s United Overseas Bank. Earlier this week, Citigroup disclosed its intention to exit its Mexico consumer business.

For the final quarter of 2021, Citigroup reported a profit of $3.18bn, or $1.46 a share, down from $4.3bn, or $1.92 per share, a year earlier. Profit was dented by the costs of consumer exits in Asia and efforts to shore up the bank’s infrastructure to appease regulators.

Analysts polled by FactSet had forecast earnings of $1.39 per share.

The changes confirm Fraser’s “strategic refresh” of the fourth-largest US lender by assets, whose shares have underperformed those of Wall Street peers for years.

​Fraser began making sweeping changes even before officially taking over as chief executive last February. Her boldest actions so far have focused on the consumer bank, which has been a point of internal contention for years due to its persistently low returns.

In April, she announced Citi was putting most of its international consumer businesses up for sale in an effort to free up capital that could be redeployed more profitably in other parts of the business.

The division, which Fraser ran for one year before being promoted to the top job, accounted for roughly 44 per cent of revenue and 29 per cent of profit in 2019.

Performance in the consumer bank continued to weigh on Citi’s results in the most recent quarter. Group revenue rose 1 per cent to $17bn as a 6 per cent decline in consumer banking revenues offset a 4 per cent increase in business from institutional clients.

The planned exits will unwind the collection of global franchises that Sandy Weill, former chief executive, built up in the early 2000s, which analysts say is now a disjointed group of businesses. Subsequent chief executives have tried getting rid of some low-performing consumer businesses, but analysts have said they are encouraged by the pace and scale of Fraser’s actions.

“Jane Fraser puts an end to a failed 50-year vision,” Mike Mayo, Wells Fargo bank analyst, said when the sales were announced last year.

Citi’s retreat to its domestic market follows a broader pullback by global banks. Last year, HSBC sold its US retail business, giving up on its 40-year attempt to run a full-service bank in the country.

The global retail banking model was based on the assumption that banks could seamlessly service a high-end consumer who regularly travels around the world for work and vacation but that “global consumer customer never materialised”, Mayo said.

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