Citi pulls out of consumer banking in 11 countries, including Japan

A man walks past a Citibank branch in lower Manhattan, New York. Citigroup says it will exit consumer banking in 11 more markets, as the most international of the big U.S. banks looks to shrink its way to better profits. -- PHOTO: REUTERS
A man walks past a Citibank branch in lower Manhattan, New York. Citigroup says it will exit consumer banking in 11 more markets, as the most international of the big U.S. banks looks to shrink its way to better profits. -- PHOTO: REUTERS

NEW YORK (Reuters) - Citigroup said it is pulling out of consumer banking in 11 markets, including Japan and Egypt, as the U.S. bank with the biggest international business looks to cut persistently high costs.

The third-largest U.S. bank, built with a series of acquisitions spanning back to the 1980s, has been trying to slim down since the financial crisis to be as profitable as rivals. It has shed hundreds of billions of dollars of bad assets.

The latest exits were the result of studies the bank began in early 2012 to figure out which countries were not profitable enough for retail banking. Getting results took a long time, partly because the bank did not have standardized accounting systems across all countries to compare the units'profitability.

The deliberate pace at which Chief Executive Officer Michael Corbat is fixing its business underscores how hard it is to fix a business as sprawling as Citigroup, which operates in more than 100 countries. Corbat told analysts that in shedding the poorly performing businesses the company is also taking a valuable step toward reducing complexity.

Citigroup separately announced the results of a probe that also illustrates how hard it is to manage the bank: it found a new US$15 million fraud at its Mexican unit, Banamex, which has been roiled by a series of mishaps.

The bank is showing some signs of progress in streamlining itself. On Tuesday, it posted stronger-than-expected third-quarter adjusted net income of US$3.67 billion, or US$1.15 per share, from US$3.26 billion, or US$1.02 per share, a year earlier.

Analysts had expected earnings of US$1.12 per share, according to Thomson Reuters I/B/E/S.

The bank said it will exit Costa Rica, Czech Republic, Egypt, El Salvador, Guam, Guatemala, Hungary, Japan, Nicaragua, Panama and Peru, as well as the consumer finance business in Korea. It will continue to serve institutional clients in these markets.

In December 2012, Citigroup said it was withdrawing from consumer banking in five other countries. After these latest exits, the bank will serve consumers in about 24 countries.