Citi pulls out of consumer banking in 11 countries, profit jumps
By Anil D'Silva and David Henry
(Reuters) - Citigroup Inc (C.N: Cotización) said it is pulling out of consumer banking in 11 markets, including Japan and Egypt, as the U.S. bank with the biggest international business looks to cut persistently high costs.
The third-largest U.S. bank, built with a series of acquisitions spanning back to the 1980s, has been trying to slim down since the financial crisis to be as profitable as rivals. It has shed hundreds of billions of dollars of bad assets.
The latest exits were the result of studies the bank began in early 2012 to figure out which countries were not profitable enough for retail banking.
Getting results took a long time, partly because the bank did not have standardized accounting systems across all countries to compare the units' profitability, sources familiar with the matter told Reuters in 2013. A spokesman for Citigroup said that the sources' comments were false, and the bank has long had systems in place to consistently measure profitability across businesses and geography.
The deliberate pace at which Chief Executive Officer Michael Corbat is fixing its business underscores how hard it is to fix a business as sprawling as Citigroup, which operates in more than 100 countries. Corbat told analysts that in shedding the poorly performing businesses the company is also taking a valuable step toward reducing complexity.
Chief Financial Officer John Gerspach, speaking earlier to reporters, said the bank first identified sub-standard businesses about a year-and-a-half ago, and tried to fix them before deciding to they had to go.
"Better late than never," said stock analyst Mike Mayo of CLSA.
Citigroup separately announced the results of a probe that also illustrates how hard it is to manage the bank: it found a new $15 million fraud at its Mexican unit, Banamex, which has been roiled by a series of mishaps. Continuación...