Citibank exits Taiwan consumer banking sector after 60 years

花旗銀行在 60 年後退出台灣個人銀行

Citibank unloads consumer banking business to DBS Bank

TAIPEI (Taiwan News) — Citibank has been a part of Taiwan’s consumer banking sector for the past half century, though this will soon be a thing of the past as it will only retain corporate services.

On Dec. 22, the Financial Supervisory Commission approved DBS Bank’s acquisition of Citigroup's consumer finance business in Taiwan for a reported NT$93.6 billion (US$3.05 billion), according to Liberty Times.

Integration of 45 Citigroup branch locations is expected to be completed by August with DBS planning to operate 74 locations around Taiwan. DBS will also take over Citibank Taiwan credit cards, some 2.79 million, ranking sixth among all domestic banks.

DBS Bank plans to remove 66 Citibank Taiwan ATMs after the acquisition. This follows a larger plan by DBS to shift banking services on-line, with DBS customers encouraged to use ATMs operated by other banks.

Citigroup was eager to sell it’s consumer finance business as profit margin in this sector had fallen to less than 3%, though Citigroup's corporate finance business saw profit margins as high as 27%, according to Liberty Times. Citigroup is also planning a larger withdrawal from the consumer finance business in 13 countries, including Australia, Bahrain, China, India, Indonesia, South Korea, Malaysia, Philippines, Poland, Russia, Thailand, and Vietnam.

Citigroup will still cater to high-wealth customers in Taiwan. Those with assets of more than US$3 million may be invited to open Citi accounts in nearby Singapore and Hong Kong.

Reshuffling of priorities

Citibank established its first branch in Taipei in 1965, covering a wide field of operations including, corporate finance, investment banking, consumer finance, and other fields. It deepened its investment in Taiwan with the acquisition of the Bank of Overseas Chinese in 2007, effectively becoming the largest foreign bank in Taiwan and the 13th largest bank domestically, operating 66 branches.

Citigroup was one of the first foreign banks in Taiwan to provide consumer banking services such as auto loans and mortgages during Taiwan’s golden period of economic growth. It began its foray into consumer services through the acquisition of Taiwan First Investment and Trust in 1988, thereby clearing the way for it to provide VISA cards and auto loans in the domestic market.

But, in a strange twist of fate, it seems like Citigroup entered the market too late as Taiwan was already becoming a mature market in terms of per capita income. Citigroup strongly adheres to a belief that when incomes rise, the burgeoning middle class will have less need for auto loans, mortgages, and credit cards.

Along with its size, Citibank was well known for being a hallowed training ground for Taiwan’s best and brightest financiers. At a time when Taiwan was facing increased political isolation, Citigroup invited many Taiwanese supervisory officials and corporate leaders to courses it hosted in New York City.

This proud list of alumnae and former staff includes many of Taiwan’s financial leaders, such as: Chinatrust Fubon Financial President Jerry Harn (韓蔚廷), Cathay Fianancial Chairman Kuo Ming-jian (郭明鑑), Taipei Fubon Bank Chairman Chen Sheng-de (陳聖德), and Nanshan Life Insurance Chairman Du Ying-zong (杜英宗).

Citigroup was once the largest financial group in the world, and at its peak, its profit was twice that of its rivals. However, in recent years, total income has been lower than that of JPMorgan Chase and Bank of America, Liberty Times said.

Citigroup CEO Jane Fraser has been tasked with returning the financial giant back to its former glory, and seeking each and every opportunity to capitalize on the untapped value of the enterprise. At the moment, streamlining operations has been her course of action, though Citigroup’s withdrawal from Taiwan’s consumer finance market may come at a heavy price, not only in Taiwan but the rest of the Asia-Pacific region.