Citigroup has explored "multiple strategic options to sell these businesses" but said it was clear that the wind-down path "makes the most sense" because of the current environment.

Citigroup said late last week that it is winding down its consumer and commercial banking arms in Russia, and is planning to sell certain Russian consumer banking portfolios. 

The US bank has been trying to exit Russia’s consumer banking industry since announcing that move in April last year as part of a wider rundown of consumer banking in a string of countries. However, since Russia’s invasion of Ukraine, and the Western sanctions that were imposed on Moscow in February and March, banks have scrambled to exit the country. In July, the US Securities and Exchange Commission sought wider disclosures from Citigroup related to how much exposure it had to the Russia-Ukraine conflict, the bank is reported to have said in a regulatory filing (Reuters, 8 July). 

At the end of the second quarter 2022, Citi’s remaining exposure to Russia stood at $8.4 billion, down from $9.8 billion at 2021 year-end, of which about $1 billion is related to the consumer and local commercial banking businesses in Russia.

Citigroup had already decided and announced that it was exiting consumer franchises in 14 markets in Asia, Europe, Middle East, Africa and Mexico. In March this year, Citi expanded the scope of its planned exit in Russia to include local commercial banking. The restructuring, which involves a pivot to wealth management, is one of the most distinctive changes under Jane Fraser, who was appointed as CEO in March last year. 

The bank said in a statement that it will start its wind-down of consumer and local commercial banking in the current quarter; the wind-down is expected to affect about 2,300 staff and 15 branches. Consumer products and channels affected by the exit include deposits, investments, loans and cards.

“As previously noted, Citi continues to support its multinational institutional clients, particularly those which are undergoing the complex task of winding down their operations in Russia,” the bank said.

There is "no change re [the] private bank [of Citigroup], as we don’t have one locally in Russia," a spokesperson told this news service when asked about the matter. 

A raft of banks, such as UBS, Julius Baer, BNP Paribas and JP Morgan, have already set out the likely costs and risk exposures to Russia. 

Citigroup has been trying to sell its consumer banking business, so the statement at the end of last week appears to be an admission that this is not viable for the time being. “We have explored multiple strategic options to sell these businesses over the past several months. It’s clear that the wind-down path makes the most sense given the many complicating factors in the environment,” Titi Cole, Citi's chief executive of Legacy Franchises, said. 

David Livingstone, Citi’s CEO of Europe, Middle East and Africa, said that the "decision is part of our continuing efforts to reduce our activities in Russia. It is aligned with other actions, including limiting our service offering, reducing our exposures, and not soliciting any new business or clients.”

In connection with the recently-announced wind-down plan, Citi expects to incur about $170 million in costs, primarily over the next 18 months, largely as a reult of restructuring, vendor termination fees and other related charges.