(ATF) Hong Kong will assume greater importance for Citigroup as a wealth management hub as banking giants sought to take over the US financial institution's Asia-Pacific retail network.
Citibank will hire 300 new relationship managers in Hong Kong and plans to triple client numbers and double assets under management in its wealth management business as it exits traditional retail banking in the region.
Last week, the US bank said it would withdraw from consumer banking in 13 markets including Australia, China, India, Korea and Thailand.
Singapore-based DBS Group and OCBC, Japan's Mitsubishi UFJ Financial Group and UK-based Standard Chartered are set to bid for parts of Citigroup's consumer business in Asia, Reuters reported.
Citibank plans instead to focus its consumer banking business on Hong Kong and Singapore and joins HSBC in focusing on wealth management in Asia.
“Hong Kong customers increasingly require portfolio advice, design and allocation geared towards diversification of asset types and geographic exposures," Lawrence Lam, chief executive of Citibank Hong Kong, said.
The potential bids from the regional banks and StanChart, which makes most of its profit in Asia, underscore their growing appetite for businesses like credit cards and mortgages in a push to lock in long-term income growth.
As Citi is not giving up its banking licences in most of the markets it is exiting, the sale of the consumer banking portfolios and branches will only appeal to lenders with an existing presence.
"DBS has always been open to exploring sensible bolt-on opportunities in markets where we have a consumer banking franchise and where we can overlay our digital capabilities," the Singapore bank told Reuters.
In 2016, DBS bought ANZ's wealth management and retail businesses in five Asian markets for about $80 million.
The businesses Citi is exiting had $82 billion in assets and were allocated $7 billion in tangible common equity last year. They accounted for $4.2 billion of the bank's $74.3 billion revenue in 2020. All the markets it is exiting made a combined loss of $40 million in the consumer banking business in the same year.
Analysts welcomed any attempt to simplify and restructure Citi's sprawling businesses.
"Despite extensive business simplification efforts, Citigroup remains a large and complex bank with attendant risk management and governance challenges," Moody's Investors Service said in a statement.
With reporting by Reuters