Big banks are giving up on their global ambitions
About 10 years ago Citigroup’s then chief executive Chuck Prince started his global apology tour, aimed at mending relationships with regulators and bolstering Citi’s reputation. Tokyo was the first stop.
The US bank had been embroiled in scandals that led to the termination of its Japanese private banking licence. To repent, Mr Prince took a carefully choreographed seven-second bow at a press conference, showing how far Citi would go to protect its global reach.
What a difference a decade makes. In October, Japan was one of 11 countries where the US bank said it would pull out of its consumer banking operations entirely, including Egypt, Costa Rica and Hungary.
“While these consumer franchises have real value, we didn’t see a path for meaningful return,” Mike Corbat, Citi chief executive, told analysts as part of its third-quarter results, which included the discovery of a new fraud scandal in Mexico.
The move follows earlier withdrawals by Citi from consumer markets in a handful of countries including Spain, Pakistan and Uruguay. In total, Citi has cut its retail banking presence almost in half to 24 countries since 2012.
HSBC, in many ways Citi’s main rival for the title of most global bank, has been pulling back too. The London-listed group has withdrawn from consumer banking in more than 20 countries, such as Colombia, South Korea and Russia, leaving it with retail and wealth management operations in about 40 markets.
This has been mirrored by others, such as Barclays withdrawing from retail banking in Spain, Italy, France and Portugal; GE Capital seeking to exit much of its consumer banking operations in Europe; and Royal Bank of Scotland pulling out of about a dozen markets, including most recently its public listing of Citizens in the US.