이 기사는 2021년 10월 27일 08:07 thebell 에 표출된 기사입니다.

Citibank Korea, the Korean unit of US banking giant Citigroup, has decided to shut down its consumer banking operations in phases, instead of selling off the division to a potential buyer.

Citibank Korea said on Monday on its website that it has decided to close its consumer banking operations, including credit card and wealth businesses, in phases.

The decision came six months after the US banking giant made an announcement in April that it will pull its consumer banking units out of 13 markets, including Korea, as part of its global business reorganization.

The bank plans to allow existing customers to use retail banking services like mobile banking, internet banking, and call centers, until the termination date of their contracts. However, new customers will not be able to subscribe to its consumer financial products and services. Further details about the changes will be announced soon.

Citibank Korea will implement a voluntary retirement program for its employees after consultations with the labor union. The bank will also minimize any inconveniences for customers through close coordination with financial authorities and maintain services until relevant contracts with cusomters expire.

The ongoing conflict between Citibank's management and labor union is expected to escalate following the latest decision. The labor union has insisted that the lender should sell the consumer banking business as a whole to a potential buyer amid concerns over job security. However, it has been practically impossible for the lender to find a buyer that is willing to shoulder the bank’s burdensome workforce structure.

As the sale process has made little progress, the value of the Korean subsidiary has significantly dropped. Citibank Korea’s consumer banking business recorded net interest income of 236.4 billion won ($200 million) in the first half, down from 239.7 billion won a year ago. Its net non-interest income also decreased from 68.3 billion won to 59.3 billion won during the same period.

The lender is expected to follow the moves by HSBC Korea, which closed down all of its consumer banking branches except for one in Seoul in 2012 after failing to find a buyer due to high labor costs.

The Financial Services Commission (FSC) said procedures are underway to review whether Citibank Korea’s exit of its consumer banking unit is subject to the regulator’s authorization, according to the nation’s banking act. It added that it will closely monitor future progress regarding the bank’s latest decision and promote measures to minimize any possible consumer inconveniences.

The FSC ordered Citibank Korea to submit specific plans on how it will protect the rights and interests of consumers before taking steps for the phased shutdown.

Analysts widely expect that Citigroup is unlikely to change its mind to shut down its consumer banking operations in phases even if the Korean watchdog disallows the decision because the US banking giant sees the country as a small and unattractive market. (Reporting by Jang-jun Lee)