Citi to wind down Russia retail and commercial banking
Citigroup plans to wind down its consumer and commercial banking operations in Russia after failing to sell the business as part of its retreat from the country.
Citi announced in April 2021 it wanted to sell its consumer bank in Russia as part of exits from 14 countries, but it had not done so by the time Russia invaded Ukraine on February 24. The invasion sparked widespread economic sanctions on Russia, complicating sales processes for banks keen to leave the country and deterring interested buyers. Citi added commercial banking to its exit plan in March.
“We have explored multiple strategic options to sell these businesses over the past several months," said Titi Cole, Citi's CEO of legacy franchises. "It’s clear that the wind-down path makes the most sense, given the many complicating factors in the environment."
Citi said it expects the wind-down to cost about US$170m in the next 18 months, mainly due to restructuring, vendor termination fees and related charges.
France's Societe Generale, one of the three biggest international banks in Russia, moved quickly and agreed in April to sell its Russian businesses to Interros Capital. SG took a loss of €3.3bn on the exit. The other two most exposed banks, UniCredit and Raiffeisen Bank International, have said they are considering exiting, but the former said attempts to leave were complex.
Citigroup was in talks with Russian private lender Expobank over a possible sale of some operations in the country, Reuters reported in July. It said talks reached an advanced stage.
But any talks appeared to have failed. Citi said on Thursday it will continue to "actively pursue" sales of certain Russian consumer banking portfolios. It will start the wind-down this quarter, which will affect 2,300 staff and 15 branches. It will include deposits, investments, loans and cards and will be carried out in compliance with applicable regulations, and Citi said it will honour obligations to clients, staff and partners.
The bank said it will continue to support multinational institutional clients, particularly those winding down their operations in Russia.
Citi's exposure to Russia was US$8.4bn at the end of June, down from US$9.8bn at the start of the year. About US$1bn of the exposure is related to the consumer and local commercial banking businesses in Russia.