One of the biggest banks in the world Citigroup Inc (Citi) recently made a huge announcement that it would be leaving the consumer banking sectors in 13 markets across several continents. What will this entail for the banking industry in Malaysia? Does it mean that more foreign banks will be doing the same soon?
Big change to move forward
Citibank is one of the earliest foreign brands to set foot in the retail banking industry of Malaysia. With the announcement, Citigroup will be leaving the markets in Asia, Europe, Africa and the Middle East. This means they will no longer operate in countries like Vietnam, Poland, Russia, the Philippines, Taiwan, Thailand, China and back home in Malaysia.
This move will mean the bank will run its consumer banking businesses through its wealth centers in London, the United Emirates, Singapore and Hong Kong. Their institutional client’s group that provides private banking, cash management and investment services in the markets will continue. This came about through the new strategy implemented by its newly appointed CEO, Jane Fraser in light of the changing market conditions.
According to the group, Citi will not be able to continue competing in the 13 markets although they have been profitable. Hence, focusing on its market segments with better and higher ROI like wealth management and investment might be a better move.
Not badly affected as expected
The CEO of Citi Malaysia meanwhile has assured the customers that the group will continue to serve its customers and that there would not be a major or immediate impact on the business and workforce as yet. They currently operate Citi Solutions Centres in Kuala Lumpur and Penang that conducts financial transactions of more than US$29 trillion each year. It currently has 10 branches operating nationwide through its history in the country dating back more than 60 years.
Growing concerns in Malaysia’s banking sector
This move has raised eyebrows among many in the industry. However, observers have been quick to assure the market that the isolated case does not reflect the trend in the industry and hence should not be overly worried. Several analysts felt strongly that it showed signs that the Malaysian banking industry must have been badly hit so much that the foreign banks are starting to withdraw. On the contrary, it would mean that competition is toned down a little giving space for more local players to produce better products and services within the country.