이 기사는 2021년 05월 12일 07:49 thebell 에 표출된 기사입니다.

Citibank Korea, the South Korean unit of Citigroup, which has started to seek buyers for its retail banking operations, is expected to use Citigroup’s sale of its Japanese retail business as a reference.

The bank's board of directors has decided to sell its consumer banking business as a whole and start mergers and acquisitions process, industry sources said on Monday.

In 2014, Citigroup pulled out of consumer banking in 11 markets, including Japan, Hungary, and Egypt. Back then, the U.S. bank offloaded its Japanese retail banking as a whole, including wealth management (WM) and credit card businesses.

Its decision was in line with the trend of the WM business emerging as a breakthrough in the Japanese banking sector as it could generate non-interest income amid the aftermath of low interest rates. Attracting more money from high net worth individuals (HNWIs) was considered the key to dominating the industry.

Citigroup’s strategy worked, with 10 local financial institutions participating in the first round of bidding for its Japanese retail banking business. Three local financial institutions joined the second round of bidding.

“Many prospective buyers participated in the race to get a glimpse of the asset status of Citibank Japan,” said an industry source. “Citibank Japan, which had a strong position in the private banking business, was considered attractive as competition for non-interest income was fierce amid low interest rates.”

This means that potential buyers’ interests in the WM business have led to the success of the deal. Sumitomo Mitsui Banking Corp (SMBC), which acquired Citibank Japan’s the retail operations, is considered to have put efforts into a business targeting HNWIs.

SMBC worked with U.K.-based Barclays on WM in Japan since 2010 and acquired Societe Generale Private Banking Japan before taking over Citibank Japan.

As the U.S. bank decides to sell its Korean retail banking business as a whole, the success of the sale is expected to depend on local banks’ eagerness to acquire the WM business. It won’t be easy for lenders to participate in the bidding considering the average annual salary of Citibank Korea's employees is 120 million won ($100,000), the highest level in the domestic banking sector.

“The bank will try to bundle its consumer banking and credit card businesses and sell them at the high price because the two are highly related,” said an industry source.

Citibank Korea has considerable experience and infrastructure in the private banking business. The lender introduced the WM business to the domestic banking industry and has the longest history. It has built solid customer trust for its customized asset management thanks to its model portfolios designed based on global networks and research capabilities. (Reporting by Hyun-ji Sohn)