Citigroup to sell China consumer wealth business to HSBC
Business
Citigroup to sell China consumer wealth business to HSBC
(Reuters) - Wall Street's main indexes dropped at the open on Monday as a deepening conflict between Israel and the Palestinian Islamist group Hamas roiled global markets and pushed investors toward safe-haven assets, while crude prices jumped over 3%.
(Reuters) - Citigroup Inc (C.N) said on Monday it had agreed to sell its China consumer wealth portfolio, including clients, assets under management (AUM) and deposits, to Asia-focused HSBC Holdings Plc (HSBA.L).
The deal covers total deposits and investment AUMs of about $3.6 billion and is expected to close in the first half of 2024. Financial details of the transaction were not disclosed.
"Today's announcement progresses the wind-down of Citi's consumer banking business in China, which was announced in December 2022," the U.S.-headquartered bank said in a statement.
Citi first announced its plan to exit China consumer banking in April 2021 as part of a global strategy revamp. The consumer banking business mainly served rich clients with deposit, fund, and structured product offerings.
Reuters first reported late last month that HSBC was set to acquire Citi's China consumer wealth business, in a major boost to the London-based bank's business in the world's second-largest economy.
Citi's consumer banking business size in China is dwarfed by Chinese banks and foreign peers including Standard Chartered (STAN.L), all of which have more retail branches handling wealth management.
The acquisition of Citi's wealth portfolio will help HSBC expand its presence in China, one of its key markets as Europe's largest lender vows to exit less profitable geographies to focus on its key revenue generator, Asia.
Based on the regulatory approvals it obtained in recent years, HSBC can now provide wealth management solutions and mobile fund and insurance solutions in mainland China, the bank said in a statement on Monday.
HSBC made a strategic investment in Shanghai MediTrust Health Technology Co. Ltd., which was announced in January.
HSBC recorded $27 billion in net new invested asset inflows in Asia for the first six months of 2023, up 21% year on year, and more than 35% of the value originates from outside Hong Kong, the statement said.
The deal with HSBC does not include Citi's institutional businesses, the bank said, adding it would continue to serve the needs of affluent to ultra-high net worth Chinese clients via its regional wealth hubs in Singapore and Hong Kong.
Since announcing its intention to exit consumer banking across 14 markets in Asia, Europe, the Middle East, and Mexico as part of its strategic revamp, Citi has now closed sales in eight markets, it said.
Apart from the China consumer banking deal, Citi plans to complete the sale of its Indonesia consumer business later this year, the bank statement said.
Previously announced wind-downs of Citi's consumer business in Korea and its overall presence in Russia are in progress. Citi has also announced it will pursue an IPO of its consumer, small business and middle market banking operations in Mexico.
The Dow Jones Industrial Average (.DJI) fell 147.74 points, or 0.44%, at the open to 33,259.84. The S&P 500 (.SPX) opened lower by 19.48 points, or 0.45%, at 4,289.02, while the Nasdaq Composite (.IXIC) dropped 105.12 points, or 0.78%, to 13,326.22 at the opening bell.
