Citi proposes UK retail exit

Dive Brief:

• Citi proposed winding down its U.K. retail banking business to focus on serving its wealthiest clients through wealth management and personal banking, the bank announced Wednesday.
• Cit would invite clients who qualify to transition to the bank’s private banking services. Citi said it would “support” customers who don’t continue on with the bank, adding that most clients won’t be affected until 2023.
• The bank has just one U.K. retail branch — inside its Europe, Middle East and Africa headquarters in London’s Canary Wharf. The financial impact of the move would be immaterial to Citi, the bank said.

Dive Insight:

The proposed U.K. retail wind-down comes nearly a year and a half after Citi announced a strategy to exit retail banking in 13 Eastern Hemisphere markets, and instead focus on four markets with high returns: Singapore, Hong Kong, the United Arab Emirates and London. The bank in January said it also planned to drop its Mexico retail-banking footprint.

The bank is still looking to deal its way out of three markets — Mexico, China and Poland — but has found buyers for most of the rest.

The U.K. would be the third market from which Citi has wound down in the past year. It chose to wind down its consumer-banking and local commercial-banking operations in Russia last month — a move expected to cost the bank roughly $170 million. Citi said last November it would wind down in South Korea, incurring an estimated $1.2 billion to $1.5 billion in charges.

While Citi might nix U.K. retail banking, competitors JPMorgan Chase and Goldman Sachs have laid out different plans. Both banks have launched digital banks in the U.K. since 2018, and executives for the former said that by May, the Chase consumer bank had attracted more than a half-million customers.

Retail banking “typically has a lot worse margin profile than wealth management,” Siddharth Singhai, chief investment officer of New York-based investment firm Ironhold Capital, told Reuters. “So it would make sense for [Citi] to just focus on this higher-return-on-capital business.”

Citi’s existing U.K. wealth business will manage the retail-exit proposal.