Citigroup to Wind Down Consumer Banking in Korea

Global investment bank Citigroup (C) has announced that it will wind down its consumer banking business in Korea. The move is part of the bank’s strategy to refocus its global consumer banking activities in Asia and Europe, Middle East & Africa (EMEA) on four wealth centers, Singapore, Hong Kong, the UAE and London.

Additionally, as part of its strategic plan, the bank has planned to exit from its consumer franchises in 13 markets across Asia and EMEA. Markedly, these exits are anticipated to release about $7 billion of allocated tangible common equity over a period of time, including $2 billion related to the winding down of the banking business in Korea.

The CFO of Citigroup, Mark Mason, said, “We continue to make progress on our strategy refresh, allowing us to increase the capital we return to our shareholders over time. In Asia and EMEA, we will focus our resources on higher-returning institutional businesses and double down in wealth, where we have distinct competitive advantages and meaningful potential for growth.” (See Citigroup stock charts on TipRanks)

The Board has provided all necessary approvals to wind down consumer operations in Korea. Notably, services provided by Citi Korea Inc. will continue as before for existing contracts, however, new sales for all consumer banking products will be stopped.

Citigroup will continue to grow its institutional franchise in the country. Citi’s institutional business in Korea provides a range of investment and banking services to corporates, banks, governments and institutional investors, including capital markets and corporate advisory.

Recently, BMO Capital analyst James Fotheringham maintained a Buy rating on the stock and raised the price target to $86 (21.42% upside potential) from $84.

Fotheringham’s action followed the company’s Q3 earnings beat, which was driven by revenue growth and expectations from the bank’s management to discuss a roadmap related to double-digit return on average tangible common shareholders’ equity (ROTCE) at its upcoming investor day in March 2022.

Shares of Citigroup have shot up 64% over the past year. Overall, the stock has a Strong Buy consensus rating based on 6 Buys and 1 Hold. The average Citigroup price target of $90.29 implies 27.47% upside potential to current levels.

Additionally, Citigroup scores a 9 out of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations. (See Top Smart Score Stocks on TipRanks >>)

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