Citigroup Inc. will wind down its Russian consumer bank after attempts to sell the unit were stymied by Russia’s invasion of Ukraine and subsequent sanctions on the nation’s financial system.
The bank said Thursday that the move, earlier reported by The Wall Street Journal, would lead to about $170 million in costs over the next 18 months.
The wind-down will start this quarter and will also include shutting down its commercial banking operations for local Russian companies. After the invasion, Citi had decided to get out of that commercial banking operation as well.
In a statement, Titi Cole, the executive who runs the unit housing businesses Citi is shedding, said the bank had explored multiple strategic options to sell the businesses. But it decided to shut them down “given the many complicating factors in the environment.”
The New York bank first said in April 2021 it would exit Russian consumer banking, part of a broad pullback from international consumer operations. The bank had been in discussions to sell operations there to Russia’s VTB. U.S. and European authorities have since sanctioned VTB to weaken Russia financially and undermine Moscow’s war in Ukraine.
Executives had still hoped to sell the bank, which has branches in 10 cities throughout the country. In May, Chief Executive Jane Fraser said the bank was in active dialogue about selling the unit. But in July, she said, “we are considering the full range of possibilities to exit our consumer and commercial banking businesses, including portfolio sales.”
Citigroup opened the retail bank in 2002 to serve wealthier citizens. It serves some 500,000 clients in Russia and has about 2,300 employees. The bank said Thursday it would still seek to sell some consumer loan portfolios.
Citi’s core business is serving multinational companies around the globe and is more exposed in Russia than other big U.S. banks. It has been cutting that exposure rapidly this year. In July, it said its worst case for losses on all the exposure was about $2 billion.
Citigroup is still working with large multinational clients in Russia, many of which are seeking to exit the country themselves.
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