Citigroup Exits China Consumer Wealth Market, HSBC Steps In


Citigroup and HSBC Announce Deal: China Consumer Wealth Business Changes Hands

Citigroup Inc (C.N) has officially confirmed its agreement to sell its China consumer wealth portfolio, inclusive of clients, assets under management (AUM), and deposits, to HSBC Holdings Plc (HSBA.L), a bank with a focus on Asia. The transaction encompasses total deposits and investment AUMs valued at approximately $3.6 billion and is slated for closure in the first half of 2024. The financial specifics of the deal were not disclosed.

In a statement, the U.S.-based bank noted that this announcement marks another step in the ongoing wind-down of Citi’s consumer banking business in China, an initiative first disclosed in December 2022. This strategic move aligns with Citi’s earlier decision, unveiled in April 2021, to exit its consumer banking operations in China as part of a broader global strategy overhaul. Primarily serving affluent clients with deposit, fund, and structured product offerings, the consumer banking segment is being divested.

Reports from late last month initially hinted at HSBC’s interest in acquiring Citi’s China consumer wealth business, a development poised to significantly bolster HSBC’s position in the world’s second-largest economy. Notably, Citi’s presence in consumer banking in China pales in comparison to that of Chinese banks and foreign counterparts like Standard Chartered (STAN.L), all of which maintain more retail branches dedicated to wealth management.

For HSBC, the acquisition of Citi’s wealth portfolio represents an opportunity to expand its footprint in China, a strategic focus area as Europe’s largest lender commits to withdrawing from less profitable markets in favor of its core revenue driver, Asia. The bank announced that, having obtained regulatory approvals in recent years, it is now capable of providing wealth management solutions, mobile fund offerings, and insurance solutions in mainland China. In January, HSBC made a significant strategic investment in Shanghai MediTrust Health Technology Co. Ltd.

According to HSBC, during the first six months of 2023, the bank recorded $27 billion in net new invested asset inflows in Asia, a 21% increase compared to the previous year. Furthermore, more than 35% of this value was generated outside of Hong Kong.

It’s important to note that Citi clarified that this deal with HSBC does not encompass its institutional businesses. The bank will continue to serve the requirements of affluent to ultra-high net worth Chinese clients through its regional wealth hubs located in Singapore and Hong Kong.

Citi also shared an update on its progress in exiting consumer banking across various markets. Apart from the China consumer banking transaction, Citi intends to finalize the sale of its Indonesia consumer business later this year. Wind-downs of Citi’s consumer business in Korea and its overall presence in Russia are currently in motion. Additionally, Citi has announced plans to pursue an initial public offering (IPO) of its consumer, small business, and middle market banking operations in Mexico as part of its strategic realignment.

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