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Business liquidation

Citibank alludes to S.Korean retail business closure

Management will come up with exit plans in July

By Jun 04, 2021 (Gmt+09:00)

Citibank alludes to S.Korean retail business closure

Citibank Korea will begin to examine ways to gradually liquidate its consumer banking business as it faces difficulties in selling the retail operations as a whole, according to its senior executives.

Since Citigroup Chief Executive Jane Fraser on Apr. 15 announced the US banking giant intended to pull out of 13 countries, its South Korean operations have been in contact with domestic bidders. 

"Several financial services companies have submitted letters of intent to buy Citibank Korea's consumer banking operations, but they voiced negative views about taking over all employees of our consumer banking business," the bank said in a statement released after its June 3 board meeting. 

"We will sit down at the negotiating tables with an open mind to find the best way to sell our business. But at the same time, we will examine phaseout plans."

According to banking sources, only a couple of companies showed interest in Citibank Korea. 
The biggest roadblock to its possible sale is the bank's high-cost structure. The average salary of Citibank Korea's employees is higher than that of domestic banks given their longer tenure than the latter with an average 18.4 years as of the end of last year.

Further, it maintains the progressive severance pay structure abandoned by most other domestic banks. Under the pay scheme, severance pay increases progressively with tenure. 

"Potential buyers expressed concerns about the challenging business environment the traditional consumer banks face, as well as our bank's employment structure and exorbitant employment costs," Citibank Korea CEO Yoon Myung-soon was quoted as saying in a memo sent to its employees after the board meeting.

"(At the board meeting), we shared the view that those are the structural problems not only of our bank but across the financial industry. Thus, there is no room for improvement even though we review them over a longer period of time."

Under a phaseout scheme, Citibank Korea will advise its clients to transfer to other financial services firms until it liquidates its business.


To demonstrate its determination to pull out of South Korea's retail market, Citibank Korea will come up with exit plans in July, saying: "Prolonged uncertainties will be against the interests of both of our customers and employees."

With its labor union opposing its business closure or a partial sale of its business, a financial industry source said the US bank will put its focus on a speedy withdrawal.

"For Citibank, its priority is not on a price, but on a swift exit," he said.

Citigroup entered South Korea's consumer banking market in 2004 by acquiring then KorAm Bank. Then, it sharply reduced the number of retail branches in both 2014 and 2017, following HSBC's pullout of the Korean retail market in 2013.

Write to Nan-sae Bin at

Yeonhee Kim edited this article.

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