Citigroup to Offload Chinese Consumer Wealth Business to HSBC

09 Oct, 2023

Citigroup to Offload Chinese Consumer Wealth Business to HSBC

Citigroup Inc (C.N) announced on Monday that it had reached an agreement to sell its China consumer wealth portfolio, including clients, assets under management (AUM), and deposits, to HSBC Holdings Plc (HSBA.L), a bank with a strong focus on the Asian market.

The deal encompasses total deposits and investment AUMs of approximately $3.6 billion and is anticipated to be finalized in the first half of 2024. The precise financial particulars of the agreement were not disclosed.

This move marks a significant step in the ongoing process of Citi's withdrawal from its consumer banking business in China, a strategic decision initially unveiled in April 2021 as part of a global restructuring plan. The consumer banking division primarily catered to affluent clients by offering deposit, fund, and structured product services.

Last month, Reuters reported that HSBC was in line to acquire Citi's China consumer wealth business, which promises to be a substantial boost to HSBC's presence in the world's second-largest economy.

Citi's consumer banking footprint in China is comparatively small when compared to local Chinese banks and foreign competitors like Standard Chartered (STAN.L), which operates numerous retail branches dedicated to wealth management.

This acquisition of Citi's wealth portfolio is expected to enhance HSBC's foothold in China, a critical market as the largest European lender strategically pivots towards exiting less profitable regions and doubling down on Asia, a key revenue generator.

HSBC stated that, following recent regulatory approvals, it is now equipped to offer wealth management solutions, as well as mobile fund and insurance services, in mainland China. In January, HSBC made a strategic investment in Shanghai MediTrust Health Technology Co. Ltd.

HSBC also reported strong growth in its Asian operations, with $27 billion in net new invested assets flowing into the region during the first six months of 2023, a 21% increase compared to the previous year. More than 35% of this value came from markets outside Hong Kong.

It's important to note that Citi's institutional businesses are not included in this deal, and the bank affirmed its commitment to serving the needs of affluent to ultra-high-net-worth Chinese clients through its wealth centers located in Singapore and Hong Kong.

As part of its strategic revamp, Citi has already closed sales in eight out of the 14 markets it intended to exit in Asia, Europe, the Middle East, and Mexico. Beyond the China consumer banking transaction, Citi also plans to conclude the sale of its Indonesia consumer business later this year.

Additionally, ongoing wind-downs of Citi's consumer business in Korea and its overall presence in Russia are in progress. Citi has also announced its intention to pursue an IPO for its consumer, small-business, and middle-market banking operations in Mexico.