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Citibank Korea considers partial sale and phased liquidation for retail banking exit Worries about consumer churn intensify

Translated by Kim So-in 공개 2021-06-08 08:01:56

이 기사는 2021년 06월 08일 07:55 더벨 유료페이지에 표출된 기사입니다.

Citibank Korea is likely to keep both sale in parts and liquidation in phases as viable options in selling its consumer banking operations even though multiple institutions have expressed interest in acquiring its business.

The bank will finalize its decision on its exit strategy by July, Citibank Korea said Thursday after the board of directors meeting held earlier on the day. It plans to start due diligence after shortlisting bidders out of financial companies which submitted their letters of intent.

The sale of its consumer banking operations has been sluggish as none of financial institutions submitted letters of intent had promised full employment of the existing staff. Citibank Korea’s union said it will cooperate only when the lender sells its business as a whole as it will assure their job security.

Market insiders said the management announced its plan last month to sell its operations as a whole, bearing its union’s reaction in mind.

However, financial companies which signed a non-disclosure agreement with Citibank Korea and submitted their letters of intent have reportedly taken a negative stance toward retaining all employees. There was no financial company which promised to acquire the lender’s consumer banking operations, which consist of wealth management, credit card and loan businesses, as a whole while retaining all employees.

This has made Citibank Korea set a more realistic timeline until its next discussion. There is no guarantee that the deal will go through after a detailed due diligence process and negotiations even after bidders have been selected.

The lender may use the time to persuade its union as the phased liquidation will be the worst possible scenario for the union as well.

It seems difficult to narrow the gap between the management and the union. The management has placed a higher priority on a “quick exit” than the price, believing it is practically impossible to secure a potential buyer which wants to take over the business as a whole.

With the sale process taking longer than expected, concerns on customer exodus have increased. Citibank Korea’s rivals are gearing up to lure the bank’s customers.

“Lengthy discussions may increase costs that are invested in tasks including restructuring and customer asset purchase and assumption,” said an industry source. Citibank Korea is currently holding various promotions, such as providing special annual interest, but it will be less attractive with its rivals starting to focus on attracting new customers, the source said. (Reporting by Hyun-ji Sohn)
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