Citi continues overseas retreat with sale of Banamex stake

Citi has been shrinking its international consumer banking franchise for nearly five years as part of CEO Jane Fraser's plan to refashion the megabank into a smaller, simpler company.

The latest milestone in that process came Monday, when Citi announced the completion of the sale of a 25% stake in Grupo Financiero Banamex, its retail banking subsidiary in Mexico.

Selling one-quarter of Banamex to Mexican businessman Fernando Chico Pardo is "a very significant part and step" in the bank's "path towards deconsolidation and ultimately a full exit," Fraser told analysts in October.

Citi's decision to scale back in underperforming overseas markets became public in April 2021, a few weeks after Fraser took over as CEO, when she revealed plans to exit 13 international markets in Asia, Europe, the Middle East and Africa. Mexico was added to the list in 2022.

The work isn't over yet. Citi, which will continue to offer institutional banking in all but one of the 14 markets, plans to conduct an initial public offering of its remaining stake in Banamex. And it's still in the process of exiting or winding down its retail operations in Korea, Poland and Russia.

What follows is an overview of Citi's retreat from international consumer banking in seven different markets.

Mexico

Mayolo Lopez Gutierrez/Bloomberg

Citi's divestiture of Banamex, a leading bank in Mexico, is one of the most complicated of the 14 exits. That's because it involves both a direct sale and a future IPO. Scaling back in the rest of the markets involved either selling the business or winding it down over time.

The road to an IPO in Mexico has been a long and winding one. Citi executives have been waiting for market conditions to be ripe before initiating the process. In September, the bank took a step forward by announcing plans to sell a 25% equity stake in Banamex to a company wholly owned by Chico Pardo and members of his immediate family.

The deal is valued at about $2.3 billion, with Chico Pardo acquiring about 520 million of Banamex's outstanding common shares, Citi said in September.

As part of the agreement, Chico Pardo is now chair of Grupo Financiero Banamex.

Citi acquired Banamex in 2001, but has been doing business in Mexico for 100 years. Fraser is familiar with the subsidiary, having served as CEO of Citi Latin America from 2015 to 2019.

"The closing of this transaction advances our strategic priority of divesting of Banamex and places it in the hands of one of Mexico's most successful investors," Fraser said in the press release announcing the completion of the sale. "It also allows us to redouble our commitment to our institutional business in Mexico, investing in the platforms, talent, and relationships that will solidify our leadership position and deliver sustained growth for our clients and shareholders."

Russia

Andrey Rudakov/Bloomberg

Citi has been winding down its operations in Russia since 2022 as part of an effort to reduce its exposure there. Russia invaded Ukraine in February 2022, causing massive disruptions for international businesses, including banks.

New York-based Citi initially sought to sell its Russia businesses, but it determined that "the wind-down path makes the most sense given the many complicating factors in the environment," Titi Cole, then a Citi executive who now sits on the bank's board, said at the time.

On Tuesday, a Citi spokesperson said the wind-down process is "near completion." The bank, which previously ended most of the institutional banking services it offered in Russia, finished the wind-down of its consumer loan portfolio in the country during the second quarter of this year, it disclosed in its most recent quarterly filing.

As of mid-2022, Citi had 15 branches in Russia and employed about 2,300 people. During the third quarter, its Russia-related exposures slightly decreased to $1.8 billion, it said in the filing.

Poland

Agata Grzybowska/Bloomberg

When Russia invaded Ukraine, Citi put on hold its plans to exit retail banking in neighboring Poland.

It eventually returned to the process, and earlier this year its Polish subsidiary, Citi Handlowy, agreed to sell its consumer banking business to Velobank.

The deal, which is expected to close by the middle of 2026, includes wealth management, micro-business banking, credit cards, consumer loans, deposits and assets under management, consumer clients of the brokerage business, branches and other consumer assets. Citi Handlowy's consumer business employees and branches will also transfer to Velobank.

The transaction notably does not include Citi's institutional businesses, which Citi Handlowy will retain.

The sale is one example of how Citi is redeploying resources into higher-growth businesses. In a press release announcing the deal, Ernesto Torres Cantú, Citi's head of international, said: "This transaction enables us to deploy additional resources to our institutionally focused businesses, so we can continue to connect corporations in Poland to our global network."

China

Qilai Shen/Bloomberg

In China, Citi decided to wind down its consumer banking unit, and to explore sales of specific portfolios within the business, rather than pursuing a more straightforward sale.

The company announced the wind-down plan in December 2022, saying that the products to be discontinued would include deposits, insurance, mortgages, investments, loans and cards.

Some 1,200 employees in China were expected to be affected, with the bank saying that it would "explore options for those employees who wish to continue to work at Citi in China or across the bank's global network."

A Citi spokesperson said in an email Tuesday that the wind down of the bank's consumer business is now "pretty much complete."

India

Citi announced a $1.6 billion deal to sell its India consumer business in March 2022, and it completed the transaction a year later.

The unit's sale, to Axis Bank Limited, included credit cards, consumer loans, wealth management and retail banking. Roughly 3,200 employees were transferred to Axis, which is one of India's largest private-sector banks.

Citi has been operating in India since 1902, and it continues to offer institutional banking in the country.

"India remains a critical institutional market for Citi," Peter Babej, who was then the company's Asia Pacific CEO, said in a statement at the time the deal was completed. "In line with our broader strategic repositioning, we will continue to support our institutional clients in this core market" and across the Asia Pacific region.

Australia

Brent Lewin/Bloomberg

Citi's plan to divest its consumer franchise in Australia moved ahead a few months after Fraser announced her intentions to scale back in certain markets. In August 2021, the bank announced that it had conducted an auction and reached an agreement with National Australia Bank Limited, which would acquire Citi's residential mortgages, deposits and unsecured lending.

The transaction, which closed in June 2022, was the first divestiture to be completed as part of the market exit strategy.

Citi continues to operate an institutional banking business in Australia, including investment and banking services to corporations, banks, governments and institutional investors.

The Philippines

As was the case with its Australian arm, Citi's deal to shed its Philippines retail unit came together quickly. In December 2021, the bank announced an agreement to sell the business — which included deposits, local credit cards and investments — to Union Bank of the Philippines.

Eight months later, the sale closed, and 1,450 Citi employees were transferred to the buyer. Citi said at the time that the deal was expected to result in the release of $300 million of allocated tangible common equity, and also to increase tangible common equity by $500 million.

"This transaction represents a positive outcome for our clients, our colleagues and our firm," Babej said in a statement when the deal closed. "We are very pleased with today's announcement, and we will use the capital generated to invest in our strategic priorities."