Citigroup Inc, the third-largest U.S. bank by assets, has announced that it will sell its consumer wealth portfolio in China to HSBC Holdings Plc, the largest bank in Europe and Asia. The deal is part of Citigroup’s global strategy to exit less profitable consumer banking markets and focus on its institutional businesses.
A $3.6 billion deal expected to close in 2024
The deal covers approximately $3.6 billion in deposits and investment assets under management (AUM) of Citigroup’s onshore consumer wealth clients in China, including individuals and small businesses. The financial terms of the transaction were not disclosed, but Citigroup said it expects to book a gain on the sale.
The deal is subject to regulatory approvals and is expected to close in the first half of 2024. Citigroup said it will continue to serve the needs of affluent to ultra-high net worth Chinese clients via its regional wealth hubs in Singapore and Hong Kong.
Citigroup’s plan to exit 14 consumer banking markets
Citigroup first announced its plan to exit consumer banking across 14 markets in Asia, Europe, the Middle East and Mexico in April 2021, as part of a strategic revamp under its new chief executive Jane Fraser. The bank said it wanted to focus on its core strengths and optimize its capital and resources.
Since then, Citigroup has closed sales in eight markets, including Australia, Bahrain, China, India, Indonesia, Poland, Russia and Thailand. It has also announced plans to pursue an initial public offering (IPO) of its consumer, small business and middle market banking operations in Mexico.
Citigroup’s consumer banking business in China mainly served rich clients with deposit, fund and structured product offerings. However, it faced stiff competition from Chinese banks and other foreign peers such as Standard Chartered Plc, which have more retail branches handling wealth management.
HSBC’s expansion in China’s wealth market
The acquisition of Citigroup’s wealth portfolio will help HSBC expand its presence in China, one of its key markets as Europe’s largest lender vows to exit less profitable geographies and focus on its key revenue generator, Asia.
HSBC has been investing heavily in China’s wealth sector, especially in the Greater Bay Area, a region that includes Hong Kong, Macau and nine cities in Guangdong province. The bank aims to become a leading wealth manager in Asia by 2025, with a target of $1 trillion in AUM and a 10% revenue growth per year.
HSBC said it will offer Citigroup’s wealth clients a comprehensive range of products and services, including digital solutions, insurance, mutual funds, securities brokerage and wealth planning. It will also leverage its global network and expertise to provide cross-border solutions for clients with international needs.
