Citibank Exit Strategy in Fog... Growing Employment Anxiety (Comprehensive)

Last Year, 939 Citi Bank Retail Finance Staff
Management States "Prioritizing Full Sale"
Mass Layoffs Inevitable if Liquidation Scenario Occurs

Korea Citibank Headquarters located in Jongno-gu, Seoul
Photo by Kang Jin-hyung

[Asia Economy Reporter Song Seung-seop] The specific exit roadmap for Citibank Korea, which has confirmed its withdrawal from the domestic consumer finance market, remains unclear. Concerns are rising that this uncertainty will inevitably increase employee anxiety. There is growing speculation that the prioritized full sale by Citibank will not be easy, making employment succession likely to face difficulties. There are also worries that if the bank proceeds with a split sale, phased withdrawal, or liquidation process, a large-scale layoff could occur.

According to the financial sector on the 6th, out of approximately 3,500 Citibank employees, 939 retail finance staff were working at branches as of the end of last year. The labor union estimates that the total number of personnel related to retail finance, including the group headquarters, is around 2,500. This accounts for nearly 70% of the total workforce, with branch staff alone making up 26% of all employees.

Citibank confirmed its withdrawal from retail finance on the 16th of last month, but the method remains undecided. At the board meeting held about ten days later, no specific schedule or details were finalized, but the focus was on a sale. It is still unclear when the next board meeting will be held or by when a decision will be made.

As withdrawal discussions intensify, employee job insecurity is expected to grow. If a split sale occurs, dividing business units such as cards and banking, some staff losses will be inevitable. For the labor union, differing employment succession conditions by division will complicate responses and create difficult situations. If liquidation begins, the likelihood of a large-scale layoff is high.

Citibank plans to prioritize a full sale of the retail finance business. This is considered the exit strategy with the least disruption in terms of employment and finances. A Citibank official stated, "Further discussions are needed on how to proceed with the exit strategy," but added, "Since a full sale is the most ideal option for both employees and customers, it will be pursued first."

Full Sale Pursued but Agreement Uncertain... Labor Costs and Sale Price Are Key Issues

However, it is uncertain whether negotiations for a full sale will be successful due to the enormous labor costs and the estimated sale price of about 2 trillion won. Citibank employees have an average tenure of 18.2 years, longer than other major domestic banks, which average 15 to 16 years. The average annual salary per employee is also relatively high at 112 million won. The large severance pay based on tenure is another obstacle. Potential buyers might opt not to mandate employment succession and instead acquire only the high-quality assets and liabilities.

In the past, Hongkong and Shanghai Banking Corporation (HSBC) also attempted to sell its personal finance division to the Korea Development Bank but failed and eventually liquidated it. At that time, HSBC and the Korea Development Bank could not reconcile differences over employee wages and employment conditions, leading to about 90% of retail finance employees taking voluntary retirement.

The labor union plans to actively express its position to financial authorities. Under current banking laws, foreign banks must obtain approval from authorities to close domestic branches or transfer business operations. The authorities must review whether depositor and creditor protections are maintained and whether plans for domestic employees are appropriate. There is also a possibility that the financial authorities may not permit the business transfer itself.

A union official emphasized, "There should be no attempts to urgently split and sell or liquidate long-term matters," and added, "We will closely communicate with the Financial Services Commission and the Political Affairs Committee to prevent large-scale unemployment."

However, since Citibank’s withdrawal plan has not been fully disclosed, authorities and the Political Affairs Committee are unlikely to take hasty actions. A Political Affairs Committee official explained, "Measures are usually considered when mass layoffs are anticipated," but added, "It is still too early to start discussions." Citibank also maintains that it is premature to publicly announce employment-related measures.

Citibank Korea was established in 2004 when Citigroup acquired Hanmi Bank. It currently operates 43 branches domestically, of which 36 are retail finance branches.

This content was produced with the assistance of AI translation services.