이 기사는 2021년 04월 26일 07:55 thebell 에 표출된 기사입니다.

U.S. banking giant Citigroup is in process to fold its retail banking operations in Korea and 12 other markets, with private equity (PE) firms drawing attention whether they will have an impact on the group’s possible sale of the its Korean unit.

Citibank Korea, the South Korean unit of Citigroup, plans to hold a board of directors meeting next week to discuss details on its plan to withdraw its retail business, industry sources said on Thursday.

Citigroup is considering withdrawal of retail banking operations in 13 countries, of which 10 are Asian countries. If the group decides to sell the retail banking operations as a whole, global financial groups including British banking giant Standard Chartered and Japan-based Mitsubishi UFJ Financial Group will likely be strong candidates. Singapore-based DBS and OCBC may also be considered potential buyers.

It is said that Citigroup has not decided whether to group its units in the Asia-Pacific region and sell them as a whole or seek new owners for each country separately.

“If Citigroup bundles and sells its subsidiaries in the Asia-Pacific region, there will be only a handful of financial groups in the world which could buy it as a whole,” said an industry source, adding, “Citigroup won’t be able to consider it as an only option as it will take a long time.”

Domestic market insiders said the group is highly likely to sell Korean retail banking business separately.

Several domestic financial holding companies including DGB Financial Group and OK Financial Group are strong candidates if a bidding war takes place. However, there won’t be many potential buyers who will be able to handle the high price tag of over 1 trillion won ($893 million) while banks are required to meet the strict Bank for International Settlement (BIS) capital adequacy ratio.

Strategic investors will likely include regional financial holding companies that want to expand their presence in the capital city and nonbank depository institution along with the nation’s four largest financial holding companies.

The fact that the presence of the traditional banking has been gradually weakened in the market due to the expansion of non-face-to-face channels and the Covid-19 pandemic also makes financial holding companies hesitant to join the race. While internet-only lender Kakao Bank continues its rapid growth, profitability of traditional banks has been weakened.

The sale of Citibank Korea, if it takes place, may draw interest from potential buyers considering Citi Card is included in the sale and Citibank's wealth management business is very competitive. Also, PE firms may use their fundraising power to relieve the burden on financial holding companies first, and sell the remaining stake by achieving digital transformation through long-term joint management.

Market insiders are paying attention whether PE firms that have financial companies in their portfolios will participate in the possible deal. It will be an opportunity for the PE firms to gain worthwhile experience even if they only get to conduct due diligence on the bank.

“Although this is regarded as a big deal worth more than one trillion won, it is difficult for financial holding companies to come forward,” said an industry source. “Financial investors which have shown continuous interest in the financial industry are more likely to be a more viable option.”

It is a more probable scanario for PE firms to form a consortium with financial holding companies instead of joining the race on their own as they have to receive approval from the country’s financial authority under strict major shareholder eligibility regulations.

Citigroup is likely to focus on the likelihood of the deal closing rather than a higher sale price. The group sold OK Capital, formerly Citigroup Capital, at a price-to-book value ratio of 0.3 times in 2015. (Reporting by Ar-rum Rho)