Citi Bank had recently announced that it will exit retail banking operations in India and 12 other countries. The other countries include Australia, Indonesia, Korea, Bahrain, Malaysia, Philippines, Poland, Taiwan, Russia, Thailand and Vietnam. Citi bank is one of the largest foreign banks in India. Let’s look at the below article to understand why Citi bank is leaving the Indian Consumer banking market.
Citibank had entered Indian retail banking in the year 1902. The business of Citi Bank in India consists of Credit Card business, retail banking, wealth management and home loans. The company has around 35 branches across India and around 29 lakh retail customers.
As of March 2020, Citi bank has around 12 lakh bank accounts and about 22 lakh credit card accounts. The bank has around 5.9% market share in the digital payments and around 6 % market share in credit card spends.
According to FY2020 Citi bank has a 15.4 % share in the market share of loans among the foreign banks in India. As of 31 March 2020, the total deposits in the bank were around INR 1.57 trillion which includes the deposits from other banks as well as customers.
It is estimated that around 26% of the foreign portfolio investments are through Citi bank India.
Reasons Why Citibank is leaving Indian consumer banking market
American based banking major Citi bank is reducing its consumer operations as part of a broader strategic review. The new Chief Executive Officer, Jane Fraser is slimming down the operations in order to focus on the wealth management business since Citibank lacks the scale to compete in the retail banking operations.
Jane Fraser while announcing Citi bank’s quarterly results said that they have decided that they are going to double down on wealth as a result of the ongoing refresh of their strategy. He said that, while all the 13 markets including India have excellent business, Citi Bank doesn’t have the scale they require to compete.
Jane Fraser added on saying they believe that their capital, investment dollars and other resources are deployed better against the higher returning opportunities which include the wealth management and the institutional businesses in India.
Other Reasons for the exit from Indian banking market
One of the other reasons for the exit from the retail market in India syncs with the trend of full or part exit of foreign banks in India from the year 2009. This is mainly because of the high capital and various other regulatory requirements in India.
These factors have pushed various foreign banks to retreat into their domestic markets in order to protect their profitability. Certain foreign banks such as Barclays, HSBC, Standard Chartered bank, etc. have curbed their operations in India and other banks such as J.P Morgan, Goldman Sachs, etc. have surrendered their banking licenses.
In addition to it, foreign banks do not find the small number of profits received from retail banks in India commercially attractive. This is one of the major reasons to exit the retail market when the domestic banks are in the process of finding more retail customers.
Citigroup has said that it will now focus on operating its global consumer banking business solely from four markets such as Singapore, Hong Kong, London and the UAE. The company said that it would continue its corporate and institutional banking business in the markets where it is ending planning to end the consumer operations.
In India, Citigroup will focus on offshoring or global business support rendering its services from major centers in Mumbai, Pune, Bengaluru, Chennai and Gurugram.
Ashu Khullar who is the CEO of Citi India said that India is a strategic talent hub for Citi and he added on saying that they will continue to tap into the rich talent pool which is available in the country to grow Citi’s five solution centers which are a support for their global footprint.
He also added that, there was no immediate change to their operations and there wouldn’t be any immediate impact to the colleagues as a result of this announcement.
Citi is not closing down its business in India but it is changing hands after it gets a requisite regulatory approval and a proper buyer. The bank said that till the time of the sale there will be no impact for their customer as well as their 21,000 employees.
FAQ
Does Citibank have branches in India?
Citibank currently has 35 branches in India with 19,235 employees.
Is Citi and Citigroup the same?
Citigroup Inc. or Citi (stylized as citi) is an American multinational investment bank and financial services corporation headquartered in New York City. Citigroup owns Citicorp, the holding company for Citibank, as well as several international subsidiaries.
Who is the CEO of Citibank India?
Ashu Khullar is the current CEO of Citibank India.
Conclusion
Citi had become one of the largest foreign banks in India over the years and its decision to close down the consumer business in the country marks the end of an era.
Banks are the place where individuals park their money. Bank’s indicate that your life’s savings are secure in their lockers or vaults. But as everything is getting digital, today banks deal with data and most of the transactions are online with just a click of few buttons and these automations and convenient banking techniques cause a lot of drawbacks if not used properly. These have created a lot of mistakes in the Industry where the customers and clients have lost their trust in the banks.
Here are some of the Biggest Blunders of Banking History
Citi Bank was acting as a loan agent between the Cosmetic company Revlon and its creditors. The bank had to pay an amount of USD 8 Million to the lenders. In February 2021 Citi bank paid an amount of USD 900 Million (around INR 6,530 crores) to the lenders. Instead of paying the interest amount to the lenders the bank paid the full loan amount. Citi bank had notified the creditors within 24 hours of the mistake but yet it hadn’t received back around USD 500 Million from around 10 others.
The bank moved to the court where the Judge said that the issue was in clash between two principles: money which is sent by mistake is supposed to be returned but if the lender is paid back in full, the creditor should not have to worry. Here, the bank had transferred to money to the people whom they owed money and the receiver had no reason to believe that it was an error.
The Judge also said that Citi group transferred the money on 11 August 2020 when the due date for the payment of interest was on 28 August 2020 and the only way the interest would have been a due on 11 August 2020 only if Revlon was paying the principal amount early.
As the lenders did not feel that the amount transferred was by mistake Citi Bank would lose around half a Million USD which is considered as the “Biggest Blunder in the Banking History”. The creditors are still not free to use the money as USD 504 Million is still frozen.
KfW bank “Germany’s dumbest bank
KfW bank accidently sent around 5 billion Euros (INR 43,966 crores) to accounts with four other banks. The bank has claimed that it was human error as an experienced programmer has committed an error which made their software automatically to transfer the amounts. The Bloomberg news has said that around 6 billion Euros have been transferred. The error was pointed out by the German Central Bank and KfW had claimed that it had immediately rectified the error not causing any financial damage.
There was a similar incident which had happened during the year 2008 where the bank transferred 320 Million Euros to Lehman brothers on the day, they filed their bankruptcy.
KfW was termed as “Germany’s dumbest bank” by the mass – market daily Bild.
Deutsche Bank’s 26 Billion Euros Blunder
The bank accidently sent 26 Billion Euros to an account in Deutsche Boerse AG’s Eurex clearinghouse in 2018. The bank had claimed that it was an operational error which happened during the movement of the collateral between Deutsche Bank’s principal accounts and Deutsche Bank’s Eurex account. The spokesman of Deutsche bank said that the errors was identified within a matter of minutes and was rectified. He also added that they had taken measures to not repeat the mistakes. This mistake had cost the company’s shares to fall by 25% that year.
There was another incident which happened in 2015 where the bank transferred around USD 6 Billion to a client’s account in the hedge fund in U. S, the bank had received back the money the next day. It has told that the transfer of money was made by a junior foreign exchange sales department employee, when the boss was on vacation.
PayPal’s USD 92 quadrillion blunder
PayPal accidentally transferred $92 Quadrillion to a man in Delaware
PayPal the online – money transfer company had accidently transferred an amount of USD 92 quadrillion to a man in Delaware named Chris Reynolds during the year 2013. The man said he was shocked when he received his monthly statement through an e-mail.
Reynolds was a PayPal customer for the past 10 years and used it to buy and sell items on eBay mostly vintage car parts. He has told that he usually wouldn’t spend more than $100 a month.
PayPal had admitted the error and paid an amount to Reynold as a compensation which was not disclosed. PayPal had admitted that it was a technical mistake.
Conclusion
The above are some important Blunders committed by the banking industry. There are a lot more blunders and with the implementation of technology the blunders have increased. The banks need to train the employees with the new technologies and make sure that the blunders don’t repeat. Updating their security systems and updating their employee’s knowledge on a regular basis will help to an extent to avoid these mistakes.
Company Profile is an initiative by StartupTalky to publish verified information on different startups and organizations. The content in this post has been approved by the organization it is based on.
Citigroup Inc. is a diversified financial services holding company that provides a broad range of financial services to consumer and corporate customers. The Company services include investment banking, retail brokerage, corporate banking, and cash management products and services. Citigroup serves customers globally.
Citigroup is the third largest banking institution in the United States; alongside JPMorgan Chase, Bank of America, and Wells Fargo, it is one of the Big Four banking institutions of the United States.
Citigroup Inc. or Citi is an American multinational investment bank and financial services corporation headquartered in New York City. The company was formed by the merger of banking giant Citicorp and financial conglomerate Travellers Group in 1998; Travellers was subsequently spun off from the company in 2002. Citigroup owns Citicorp, the holding company for Citibank, as well as several international subsidiaries. Citi is incorporated in New York.
Citigroup is the third largest banking institution in the United States; alongside JPMorgan Chase, Bank of America, and Wells Fargo, it is one of the Big Four banking institutions of the United States. It is a systemically important financial institution and is on the list of systemically important banks that are commonly cited as being too big to fail. It is one of the nine global investment banks in the Bulge Bracket.
Citigroup is ranked 30th on the Fortune 500 as of 2019. Citigroup has over 200 million customer accounts and does business in more than 160 countries. It has 204,000 employees, although it had 357,000 employees before the financial crisis of 2007–2008, when it was bailed out by a massive stimulus package from the U.S. government.
Citigroup is the holding company for the following divisions: Bank Handlowy (Poland), Citibank Argentina, Citibank Australia, Citibank Bahrain, Citibank China, Citibank Europe, Citi Private Bank, Citibank (Hong Kong), Citibank India, Citigroup Global Markets Japan, Citibank Indonesia, Citibank Korea, Citibank Malaysia, Citibank Russia, Citibank Singapore, Citibank Uganda, Citibank United Arab Emirates, and Grupo Financiero Banamex.
Citigroup – Logo and its meaning
Logo of Citigroup
In 1812, City Bank of New York was organized. The name Citicorp was adopted in 1967 as an abbreviation of First National City Corporation. By then, the nickname “Citibank” already existed. In fact, it was in use since the 1860s, when it was the bank’s eight-letter wire code address.
The word “Citigroup” was reduced to “Citi”, a simpler, lighter type. The red umbrella of the old logo transformed into a red curve. The logo was developed by Paula Scher from Pentagram.
Sanford Weill (Travelers Group) and Samuel Osgood (Citicorp) are the founders of Citigroup.
Citigroup’s origins date to the early 19th century. In 1811 the U.S. Congress refused to renew the charter of the First Bank of the United States—the country’s central bank, which had branches in cities such as New York. Thus, on June 16, 1812, some First Bank’s New York shareholders and other investors secured state incorporation of the City Bank of New York, which was later established in the branch banking rooms of the old First Bank.
The bank grew as New York City became the nation’s commercial and financial capital, and in 1865 it was chartered under the National Bank Act and renamed the National City Bank of New York. In 1897, it became the first large American bank to open a foreign department and, in 1915, became America’s leading international bank upon the purchase of International Banking Corporation (founded 1902), which had 21 overseas offices in 13 countries and territories.
Other mergers and acquisitions in the United States and overseas expanded the bank. Notably, in 1931 it acquired the Bank of America, N.A. (another descendant of the First Bank of the United States and no relation to the former California-based bank founded by Amadeo Peter Giannini). In 1955, it merged with the First National Bank of the City of New York (founded 1863). Upon the latter merger, the consolidated company took the name of First National City Bank of New York.
Citigroup – Mission
Citigroup’s mission statement,”Citi’s mission is to serve as a trusted partner to our clients by responsibly providing financial services that enable growth and economic progress. Our core activities are safeguarding assets, lending money, making payments and accessing the capital markets on behalf of our clients. We have 200 years of experience helping our clients meet the world’s toughest challenges and embrace its greatest opportunities. We are Citi, the global bank – an institution connecting millions of people across hundreds of countries and cities.”
Citigroup – Business Model
Citi provides a broad range of financial and banking services that target a wide range of corporate, institutional, and individual clients around the world.
The company’s primary customer segments can be listed as follows:
General Consumers, comprising the general consumer population across the company’s numerous operating jurisdictions, to which it provides consumer banking and credit services;
High-Net Worth Individuals, comprising affluent consumers and family offices to which the company provides specialist wealth management services;
Corporations, comprising small, medium, and large business across multiple sectors, to which the company provides a range of retail banking services;
Institutions, comprising various non-governmental organizations, charities, and other institutions to which the company provides wealth management and retail banking solutions;
Government Bodies, comprising government departments, public sector entities, and other governmental institutions to which the company provides a range of banking services.
Citi serves around 2 million customers across more than 160 countries worldwide. The bulk of the company’s revenue is derived from customers in North America, with the remainder divided between Latin America, Asia, and Europe, the Middle East, and Africa.
Citigroup has made 86 investments. Their most recent investment was on Oct 15, 2020, when 4G Capital raisedKES285M.
Date
Organization Name
Round
Amount
Oct 15, 2020
4G Capital
Debt Financing
KES285M
Oct 6, 2020
AccessFintech
Series B
$20M
Oct 5, 2020
Genesis Global
Corporate Round
–
Sep 30, 2020
BioCatch
Series C
$20M
Sep 22, 2020
CloudMargin
Series B
$15M
Sep 10, 2020
Capitolis
Venture Round
$11M
Aug 19, 2020
PadSplit
Series A
$4.3M
Aug 18, 2020
Solidatus
Corporate Round
–
May 15, 2020
Spark Systems
Series B
SGD15M
Citigroup – Acquisitions
Citigroup has acquired 6 organizations. Their most recent acquisition was The BISYS Group on Aug 1, 2007.
Aquiree Name
Date
Amount
About Acquiree
The BISYS Group
Aug 1, 2007
–
The BISYS Group global outsourcing solutions firm that helped investment firms and insurance companies to more efficiently serve
Automated Trading Desk
Jul 2, 2007
$680M
Automated Trading Desk develops automated trading systems for the trading companies, buy and sell-side firms, and financial institutions
Quilter Cheviot
Dec 13, 2006
–
Quilter Cheviot operates as an independently owned discretionary investment management firms
Koram Bank
Feb 18, 2004
–
KorAm is the sixth largest commercial bank in Korea
Banamex
May 18, 2001
–
Banamex offers the best financial products and services: Credit Cards, Mortgage loans, Personal loans, exchange rate
European American Bank
Feb 13, 2001
–
European American Bank
Citigroup – Competitors
Citi‘s top competitors include State Street, BNP Paribas, Morgan Stanley, RBS, HSBC, Bank of America, Wells Fargo, JPMorgan Chase, CIT andState Bank of India.
One issue forces the bank to haemorrhage cash, the other prevents it from returning money to shareholders.
Analysts say the bank still has to get rid of dead weight on its balance sheet. That weight takes the form of underperforming, low-return businesses and Citi Holdings, the bank’s cluster of bad assets and businesses put together after the financial crisis.
The second issue with Citi analysts want to see cleaned up is the bank’s legal mess in Mexico. Few months ago, regulators accused Citi’s subsidiary, Banamex, of defrauding clients.
The New York-based bank slashed jobs across its fixed-income and stock-trading operations over the course of 2019, according to people familiar with the matter. That included at least 100 jobs in the equities unit, which would amount to almost 10% of the division’s workforce.
Citigroup – Future Plans
Citi announced its new five-year 2025 Sustainable Progress Strategy to help accelerate the transition to a low-carbon economy. This new strategy includes a $250 Billion Environmental Finance Goal to finance and facilitate climate solutions globally. This builds on Citi’s previous $100 billion goal announced in 2015 and completed last year, more than four years ahead of schedule.
This new strategy, integrated into Citi’s Environmental and Social Policy Framework, will focus on three key areas over the next five years:
Low-Carbon Transition: Citi aims to finance and facilitate an additional $250 billion in low-carbon solutions, in addition to the $164 billion the bank counted toward its $100 Billion Environmental Finance Goal (2014-2019). This new goal includes financing and facilitating activities in renewable energy, clean technology, water quality and conservation, sustainable transportation, green buildings, energy efficiency, circular economy, and sustainable agriculture and land use. Citi will continue to develop innovative financing structures and seek opportunities to scale positive impact in these areas while supporting clients across all sectors in the low-carbon transition.
Climate Risk: Measuring, managing and reducing the climate risk and impact of Citi’s client portfolio is a key aspect of a low-carbon transition. Citi has been a leader in climate assessment and disclosure in alignment with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, releasing its first TCFD report in 2018. Citi will further test the resilience of its lending portfolios to transition risks and physical risks related to climate change, and continue to disclose in line with TCFD.
Sustainable Operations: This strategy includes fourth generation operational footprint goals focused on GHG emissions, energy, water, waste reduction and sustainable building solutions. Since 2005 we have reduced 3,600 GWh of energy use and avoided 2.4 million MTCO2e, equal to the GHG emissions of over half a million cars on the road for a year (equivalency provided by EPA calculator). While climate science requires global CO2 emissions to be reduced by 45 percent by 2030, Citi is accelerating that timeline with a 45 percent reduction target in CO2 emissions by 2025. Citi expects to meet its goal of sourcing 100 percent renewable electricity to power facilities globally before the end of 2020.
Avantika Bhardwaj
