Citigroup Inc. (C) continues to scale down its global operations. Just over a month after the announcement of selling its retail banking operations in Japan, the Wall Street banking giant has drawn interest from five Czech banks for its retail operations in the Czech Republic, per newspaper E15.
The five banks – Erste Group’s Ceska Sporitelna, Societe Generale’s Komercni Banka, KBC’s CSOB, Raiffeisenbank and local bank Fio Banka are prepared to take part in a tender for the operations. Citigroup is a major player in the credit card business in the country.
The operations consist of services to more than ten thousands of customers. However, Citigroup will continue to operate corporate banking business in the Czech Republic.
Strategic Moves
In fact, Citigroup has already retreated from some global markets, and further announced “strategic actions” in Oct 2014. The company stated that it proposes to exit from the consumer banking business in 11 markets. The global footprint will now cover 24 markets that represent more than 95% of Global Consumer Bank’s (GCB) current revenues.
The 11 markets include Czech Republic, Japan, Costa Rica, Egypt, El Salvador, Guam, Guatemala and Hungary. Citigroup expects to significantly complete its strategic actions by the end of 2015. The move comes in line with the company’s strategy to focus on markets where it has a strong presence and long-term growth prospects.
Further, in its latest earnings conference call, management noted that apart from trimming its consumer business, Citigroup also intends to exit from a number of non-core businesses in Institutional Clients Group (ICG). These include hedge fund services within securities services, and prepaid cards business in treasury and trade solutions. The move is aimed at further lowering the expense base and improving net income of the company. Such businesses will be included in Citi Holdings.
Also, in line with its move of shedding branches, Citigroup will further vend or shut down 60 branches in the earlier part of 2015. By the end of the first quarter 2015, roughly 90% of the company’s branches will be concentrated around New York, Boston, Washington DC, Miami, Chicago, LA and San Francisco.
Bottom-Line
We remain encouraged as the company continues with its repositioning and restructuring initiatives while remaining focused on resolving several of its internal setbacks including legal issues and capital plan. We believe these streamlining initiatives will bolster the company’s capital position, reduce expenses and drive operational efficiencies.
Citigroup currently carries a Zacks Rank #3 (Hold). Some-better ranked stocks in the finance space include Heritage Oaks Bancorp (HEOP), Mutualfirst Financial Inc. (MFSF) and Central Pacific Financial Corp. (CPF). All three stocks sport a Zacks Rank #1 (Strong Buy).
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