Wall Street giant Citigroup is set to shut down its retail and commercial businesses in Russia starting this quarter and expects to incur about $170 million in fees over the next 18 months.
The US bank with the largest presence in Russia announced plans in April 2021 to exit retail banking as part of a broader move away from some overseas markets.
Following Russia’s invasion of Ukraine, the scope of this exit was expanded to include local commercial banking in March, but failed to find a buyer for either company.
The closure will affect about 2,300 of Citi’s 3,000 employees in Russia at 15 branches, the bank said.
Citi joins other major Wall Street players that have also closed or announced plans to close operations in Russia, in line with sanctions imposed by Western countries.
“It seems like a good move,” said Siddharth Singhai, New York-based chief investment officer at Ironhold Capital.
That’s because lending in Russia is high risk and the country could suffer a severe economic downturn due to economic sanctions.
Citigroup shares rose 1.3 percent to $51.68 in early trade after yesterday’s announcement.
The bank had announced $8.4 billion of exposure to Russia at the end of the second quarter, up from $9.8 billion at the end of 2021.
About $1 billion of that exposure is related to consumer and local commercial banking, it said in a statement.
Eric Compton, equity strategist at Morningstar, said Citi’s exposure covers all outstanding Russia-related positions, bar for office closures and layoffs.
“The key takeaways are, firstly, additional clarity for the bank as they come to a final endpoint for another of the units they were looking to dispose of, and secondly, we now know that approximately $170 million in costs will be associated with.” of processing,” he said. “For a bank where we forecast spending in excess of $50 billion in 2022, this is a rounding error.”
“We have reviewed several strategic options over the past several months to sell these businesses,” said Titi Cole, Citi’s chief executive officer for legacy franchises, in the statement.
“It is clear that the resolution path makes the most sense given the many complicating factors in the environment.”
The exit affects deposit accounts, investments, loans and cards.
Chief Executive Jane Fraser, who took the helm last year, has sought to simplify the Wall Street giant, which has reduced its overseas presence by exiting non-core markets and recently reached agreements to sell its consumer businesses in Bahrain and India announced.
Citigroup also said yesterday that it will continue to support its multinational institutional clients, particularly those facing the complex task of going out of business in Russia.
Russia’s economy was hit hard by sanctions after invading Ukraine.
https://www.independent.ie/business/personal-finance/latest-news/citigroup-is-to-shut-its-consumer-and-business-arms-in-russia-after-trying-to-sell-up-41937857.html Citigroup will shut down its consumer and business arms in Russia after trying to sell them