Citibank's 'Retail Banking Blueprint'... Outline to Emerge in Mid to Late This Month (Comprehensive)

Yoom Young-soon, Bank President: "Statements May Come in Mid to Late July"
Financial Firms Completing Due Diligence Evaluate "Cards and WM as Attractive"

Korea Citibank announced its withdrawal from the domestic consumer finance sector. Photo taken on the 19th at the Korea Citibank headquarters in Jongno-gu, Seoul. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Song Seung-seop] Prospective buyers of Korea Citibank are expected to complete due diligence and announce their positions within this month. Amid ongoing political pressure for a full sale and employment succession, there are also forecasts that withdrawal plans will be concretized.

According to financial authorities and industry insiders on the 2nd, Yoo Myung-soon, CEO of Korea Citibank, recently mentioned in a meeting with the labor union that "positions from participants in the due diligence process could be revealed by mid to late July." The union holds regular weekly meetings with CEO Yoo. This information has been shared internally with employees.

CEO Yoo's statement aligns with the announcement made by Korea Citibank immediately after its board meeting on the 3rd of last month. At that time, Korea Citibank noted that "there may be some variables in the progress," but also stated that "discussions have been held in a direction to present an outline for the execution of the exit strategy by July." Although the sale method has not been finalized, the schedule to determine the participation of potential buyers through individual behind-the-scenes negotiations within this month remains unchanged.

This can also be interpreted as a remark to prevent internal employee unrest. As unverified rumors about acquisition and employment succession circulated widely, CEO Yoo reminded the expected announcement timing directly. A financial sector official hinted, "There were probably baseless rumors several times a day, and various messages and inquiries must have flooded the labor-management sides," adding, "I understand that baseless rumors are also spreading widely among employees."

However, Korea Citibank maintains that it cannot confirm whether the sale will proceed by skipping the preliminary bidding process, as some claims suggest. If a preferred negotiator is selected immediately, the announcement timing could be moved up due to reduced additional due diligence processes.

Currently, prospective buyers of Korea Citibank are conducting corporate due diligence. The process involves multiple financial firms that submitted Letters of Intent (LOI) reviewing the virtual data room opened by Korea Citibank. Most asset inspections are in the final stages, and the firms are reportedly reviewing their participation in the final bidding.

Due Diligence Nearing Completion... 'Full Sale' Scenario Uncertain

Among the multiple financial firms reviewing the data, the card and wealth management (WM) sectors are considered attractive. Citi Card is noted for its high customer loyalty and the advantage of retaining customers even if sold separately. In 2008, it partnered with Shinsegae Department Store to launch the ‘Shinsegae Citi Card Quattro,’ securing premium customers. Subsequent products like the ‘Shinsegae Citi Reward Card’ and ‘Shinsegae Citi Clear Card’ also performed well, making the card sector an opportunity to attract customers for financial groups with weaker card divisions.

The WM sector is evaluated as a business that incorporates high-net-worth individuals as clients and provides stable non-interest income. Korea Citibank has been recognized for its competitiveness in WM since it first introduced private banking (PB) in Korea in the 1980s. Its portfolio solutions tailored to diversified investments and customer risk profiles have been well received by the market and wealthy clients. The competitiveness of overseas funds based on its global network also enhances its acquisition appeal.

However, whether a ‘full sale’ will occur as demanded by political circles and labor unions remains uncertain. Some ruling party lawmakers have expressed that the sale should not lead to mass unemployment. Six lawmakers from the Democratic Party met with CEO Yoo at Korea Citibank’s headquarters last month, requesting that the sale proceed through sufficient consultation with the labor union. Financial Services Commission Chairman Eun Sung-soo also responded to a related inquiry by Assemblyman Bae Jin-kyo at the National Assembly’s Political Affairs Committee the day before, stating, "If possible, both labor and management agree that employment should be maintained and consumer harm minimized through a full sale."

Financial firms interested in acquisition are reluctant to guarantee employment succession for all consumer finance employees. Korea Citibank’s Consumer Finance Division has not hired new employees for about 10 years, resulting in a relatively older workforce. The average annual salary is also high at 112 million KRW, exceeding that of existing commercial banks, and the retention of a progressive severance pay system adds to the burden of employment succession.

Korea Citibank initially planned to prioritize a full sale but has shifted its stance to also consider preparatory procedures for a phased closure plan. As pressure for employment guarantees intensifies, voluntary retirement possibilities have recently been mentioned. In a ‘CEO message’ sent to employees, CEO Yoo emphasized, "We will make every effort not to lose employees through transfers, voluntary retirements, and internal redeployments resulting from the sale."

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