Citibank has announced to shut its retail banking business including credit cards, savings bank accounts, personal loans etc. in 13 countries including India. The bank intends to operate its consumer banking business from 4 wealth centres- Singapore, Hong Kong, UAE and London.
With this announcement, a big question arises about its possible impact on the existing customers of the bank and employees in India. Also, Citi’s exit from India will serve as an opportunity for banks in India to either acquire the existing stock of clients or gain share markets in segments like loans, credit cards etc. Let us understand the impact of this situation.
Why is Citibank exiting its consumer business in India?
According to the sources, Citibank is facing scalability issues in the 13 countries including India and hence the decision was made with the intention to cut down the costs and strengthen their business in more developed countries. However, the exact reason for the exit is unknown.
What does it mean?
Citibank has decided to exit its retail banking business which includes bank accounts, deposits, credit cards and retail loans. This announcement is majorly a call for all the potential buyers to show interest in Citibank’s retail products. Among all the products, the most high-profit business for Citibank in India is that of credit cards with about 6% market share in spends.
Citibank India has 2.2 million credit card accounts and claims that its average credit card spend is 1.4 times the industry average. However, over the years, Citibank has lost its market share to popular competitors such as HDFC Bank and SBI Card. Given Citi’s great mix of premium credit cards and corporate cards, this announcement would invoke interest among both large and small players in the banking industry.
Will the existing account holders be impacted?
Citibank India has already started looking for buyers to take over its retail business. Although the bank has confirmed that till the process is completed, there will be no impact on the existing customers or its employees.
The bank is not winding up its business but will initiate an exit process after formal approval from the RBI. Hence, it will be a structured process and until the sale takes place, the bank will continue to do business and provide services to its customers.
Will there be an impact on its credit card business in India?
The bank has confirmed that the credit card business will function normally and there will be no impact on the customers. However, after the sale process is completed, the customers can make a choice whether to continue with the new owner or close their account.
Opportunity for Potential Buyers- Who will be interested?
Citi’s exit from India will definitely serve as an opportunity for all the banks in India. We believe there can be seen a lot of interest among both large-scale issuers like SBI Card, ICICI Bank, Axis Bank who might be looking to increase their share of premium credit cards as well as small issuers like RBL, IndusInd Bank, DBS Bank, IDFC First Bank etc.