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Citigroup plans to pull Smith Barney from Taiwan

FWR Staff 20 March 2008

Citigroup plans to pull Smith Barney from Taiwan

And it may be preparing to sell Smith Barney Australia, say media reports. Citigroup plans to close Smith Barney's operations in Taiwan this year as the U.S. megabank moves to restructure its business in Asia.

Smith Barney is New York-based Citi's retail-brokerage unit and part of its Global Wealth Management (GWM) division along with Citi Private Bank and Citi Investment Research.

Meanwhile Citi is negotiating with National Australia Bank with a view to offloading Smith Barney's Australian operations, according to several Australian newspapers.

Several things

Citi will close -- not sell -- Smith Barney's Taiwanese business in the second quarter of 2008, according to a report by Reuters. Smith Barney has a staff of about 50 in Taiwan.

The Asian-Pacific region saw an 8.6% increase in its high-net-worth population in 2006 with Taiwan and Singapore among the region's most ebullient wealth markets, according to Capgemini's and Merrill Lynch's latest World Wealth Report.

But competition -- from local players like Taipei Fubon Bank and Chinatrust Bank and foreigners like UBS and Standard Chartered -- is stiff in Taiwan.

As it moves to shutter Smith Barney in Taiwan, Citi says it's making brokerage more integral to its overall wealth-management offering in Singapore and Hong Kong, particularly on the private-banking side.

This seems to reflect Citi's recent resolution to re-orient segments of Smith Barney and its private bank to serve specific wealth tiers.

But developments in Taiwan and possibly Australia may have to do with Citi's attempts to cut costs and raise money as it continues to smart from a $10-billion loss in  linked, it says, to sub-prime-mortgage-related holdings, and a share price that has been dropping like a rock since late last spring.

Citi says it has seen net income growth of around 20% a year for its Asian private-banking business over the past five years. -FWR

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