City Bank's Exit Strategy in the Fog... Postponing the Decision on 'Retail Banking Sale' Again

Seoul Jongno-gu Korea Citibank Headquarters. Photo by Kang Jin-hyung

[Asia Economy Reporter Song Seung-seop] Citibank Korea has decided not to finalize its consumer finance exit strategy at this month's board meeting. This marks a second postponement following the delay of the exit strategy decision in July.

According to industry sources on the 24th, Citibank will not include the domestic consumer finance exit strategy on the agenda for the regular board meeting scheduled for the 26th. The specific schedule for discussions remains undecided.

Citibank is considering various exit strategies including a full sale, partial sale, or phased shutdown of its consumer finance division. Industry insiders widely believe that a full sale is unlikely. Multiple financial institutions interested in acquisition have expressed reluctance due to high labor costs and employment succession issues.

Following the schedule delay and the absence of a clear roadmap, some speculate that even partial sale efforts may be facing difficulties. Until now, the most likely sale approach has been a partial sale of core business units such as credit cards or wealth management (WM). Citibank has been negotiating sale conditions with several financial institutions that submitted letters of intent, but it is reported that there are differences in views regarding specific terms.

If Citibank fails to reach an agreement on acquisition terms with interested parties, it may resort to a phased shutdown. After the regular board meeting in June, Citibank stated, “We will discuss openly to find the best sale method while also reviewing preparatory steps to implement a phased shutdown,” leaving the possibility open. Especially since Citigroup plans to complete the exit strategy within this year if possible, the longer negotiations are delayed, the greater the likelihood of a phased shutdown, analysts say.

If either the partial sale or phased shutdown scenarios materialize, conflicts with the labor union are expected to intensify. The union has stated it cannot agree to any direction other than a full sale. At the end of last month, the Citibank union warned, “If the bank hastily finalizes a preferred bidder for partial acquisition, the labor union will launch a strong resistance campaign,” emphasizing, “We demand the sale of the entire consumer finance group business division and employment succession for affiliated employees, and we are prepared to accept voluntary retirement based on voluntary choice.”