Citibank has announced that they will shut down entire retail banking operations across 13 nations, and that includes India as well.
Read More: Citibank India Shuts Down Banking Operations; What About 20,000 Employees In India?
As per the bank, it’s no longer feasible to conduct business in these nations due to scalability issue, and rather they will focus on the 4 most important wealth hubs outside US: Dubai, Singapore, Hong Kong and London.
3 Reasons Why Citibank Is Closing Down Indian Operations & Selling Off Banking Business
In India, Citibank is the largest foreign bank, and started their operations in 1902. More than 20,000 employees are working with Citibank India.
For Indian retail banking operations, Citibank has made it clear that they will not fire any employee, and no retail banking customer will be impacted.
Now the big question is: Who Will Buy Citibank India’s Retail Banking Operations?
We asked few startup founders and serial entrepreneurs about their reaction on this decision by Citibank.
This is how they reacted:
Aditya Damani, Founder, Credit Fair:
“We will have to wait and watch who will aquire Citi . There are a bunch of universal bank applicants who might consider apart from well capitalised private banks.
I think this will open more opportunities for fintech lenders to grab market share. Especially in credit cards segment.”
Siddhaant Mohta, Co-founder at Doot:
“Citigroup’s decision to sell its consumer business is India makes it the latest in a long line of foreign banking entities to exit their Indian operations fully or in part. Notably, Citi being the largest and oldest foreign banking institution in the country makes this a more serious blow to the Indian consumer banking story. It is evident that high regulatory and operational costs have led to an inability amongst foreign banks to achieve size and scale on par with domestic counterparts, affecting profitability, competitiveness and overall commitment to the Indian consumer market.”
Mr. Alok Tiwari, Co-founder & CEO, CogNext:
“Citi’s exit from retail banking in major Asian markets including India is a bold step with a clear plan to improve performance and catch up with its US peers in generating shareholders return. It’s strategy to gravitate towards higher margin wealth management business looks a right strategy on the drawing board. The devil lies in the execution because wealth is a segment that is being chased by all banks but mastered by few. Let’s see if Citi finally succeeds in creating wealth by chasing wealth creators, they have taken the first step in the right direction.”
Mr.Viraj Nanda, CEO of Globalise:
“This may have come as a surprise to some. However underlying issues with restriction on branch networks, difficulties to scale, digital efforts required specific to local markets getting mired in global bureaucratic delays, etc, have been there for a while. The option to incorporate as local subsidiaries have not been adopted.
Customers however need not panic nor need to take any immediate action. The sale process will take months and both RBI and Citibank would ensure that there is no interruption & a smooth transition to new ownership. Meanwhile, customers can continue to use and enjoy the features of a Citibank account that attracted them in the first place.Also, customers of Globalise who use their Citibank accounts to fund their Globalise US shares investment account can continue to do so.”
Utkarsh Sinha, Managing Director Bexley Advisors:
“Citibank’s retail operations in India are just a fraction of domestic incumbents, and did not represent the scale needed for a large international financial institution. Their deposit base, for example, was c. ? 1.57 trillion, which is just over a tenth of HDFC’s ? 13.35 trillion.
Citi has early moats in credit cards and wealth management, but domestic incumbents have caught up, particularly in the past few years when both HDFC and SBI have leveraged their large retail base to expand their credit card coverage significantly.
Citi played a significant role in both digitization and the professionalization of banking services in India, being one of the first international standard setters in India along with Standard Chartered, HSBC and DBS. Their departure is a signal of their bearishness on further growth in the retail segment, which has already seen massive expansion by the domestic incumbents.- Citibank’s retail operations in India are just a fraction of domestic incumbents, and did not represent the scale needed for a large international financial institution. Their deposit base, for example, was c. ? 1.57 trillion, which is just over a tenth of HDFC’s ? 13.35 trillion.
Citi has early moats in credit cards and wealth management, but domestic incumbents have caught up, particularly in the past few years when both HDFC and SBI have leveraged their large retail base to expand their credit card coverage significantly.
Citi played a significant role in both digitization and the professionalization of banking services in India, being one of the first international standard setters in India along with Standard Chartered, HSBC and DBS. Their departure is a signal of their bearishness on further growth in the retail segment, which has already seen massive expansion by the domestic incumbents.”
Adetee Agarwaal, Founder of Pink Aprons:
“We were quite surprised by Citibank India’s decision to quit an emerging market like India. We have been using their services for wealth management and investment since long, and their banking and retail services are outstanding. We were relieved when they announced that their retail banking services won’t be closed, but will be sold off. We hope that the new entity that takesover/acquires Citibank will continue to offer the world class services for which Citibank is known for. And we hope that they roll out some nice schemes and programs to encourage Indian entrepreneurs.”
Mr. Mahesh Shukla, Founder PayMe India:
“It is regretful to know that one of the oldest and the largest foreign bank is taking an exit from India. As CITI is into profits, the newscast of their departure is somewhat surprising for the Banking & Financial industry. However, it is believed that CITI’s exit won’t impact the customer as there are other competent service providers to cater to the HNI cluster. India, will anyways and always be a focus for CITI and other foreign banks.”
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