Citigroup has decided to dissolve, rather than sell, the majority of its consumer and commercial banking operations in Russia, the New York megabank announced Thursday.
The revised plan, which is expected to cost Citi about $170 million over the next 18 months, follows an effort to find a buyer for operations in a country that ignited a war in Ukraine this year.
Just last month, Citi was
"We have explored multiple strategic options to sell these businesses over the past several months," Titi Cole, Citi's CEO of legacy franchises, said in a press release Thursday. "It's clear that the wind-down path makes the most sense given the many complicating factors in the environment."
The wind-down will include deposits, investments, loans and cards, the company said. The move is expected to impact about 2,300 employees and result in the closure of 15 branches.
While most of Citi's consumer and commercial banking operations in Russia will close, the bank said that it will continue to "actively pursue sales of certain Russian consumer banking portfolios." Citi declined Thursday to provide more details.
The $2.4 trillion-asset bank also pledged to keep supporting multinational institutional clients that have a presence in Russia, particularly those that are in the process of closing down their own operations in the country.
Citi's strategy in Russia has been evolving for a while. In April 2021, CEO Jane Fraser said the company would
Then, in March, Citi expanded the scope of its exit from Russia, saying it would also get out of local commercial banking in response to the invasion of Ukraine, which started in February. Citi is one of numerous
As of June 30, Citi's exposure to Russia was $8.4 billion, down from $9.8 billion at the end of December. About $1 billion of that total is related to consumer and commercial banking, Citi said.
The decision to close most of its consumer and commercial operations in Russia is in line with other actions that Citi has taken regarding the country, David Livingstone, Citi's CEO of Europe, Middle East and Africa, said in the release. He pointed to Citi's earlier decisions to limit its services, reduce its exposures and not solicit new business or clients.
The $170 million in charges related to the wind-down include restructuring and other related costs, as well as vendor termination fees, Citi said.
Since Fraser took the helm as CEO in March 2021, the company has been
In addition to exiting the consumer franchises in the 13 markets identified in April 2021, the bank has also announced plans to
Those announcements leave Mexico, China and Poland as countries where exit strategies have not yet been finalized.
Corporations are navigating shifting geopolitics, and M&A bankers are advising them as they consider selling off faraway units and focusing more on assets closer to home or in friendlier countries.
Given Citi's current focus on simplifying itself in order to achieve greater profitability and, ultimately, greater shareholder value, its updated plans for Russia make sense, analyst Gerard Cassidy of RBC Capital Markets wrote Thursday in a research note.
"As the company shrinks its global footprint, management will be better able to focus on the businesses in which it has economies of scale that can drive higher the company's consolidated profitability," Cassidy wrote.
"We recognize the process which Fraser has undertaken will take time, but we view today's announcement as another important step in the right direction."
