Citigroup to Spend Up to 1.8 Trillion Won on Withdrawal from Korea

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Cho Hyun-ui] Citigroup plans to spend up to $1.5 billion (approximately 1.776 trillion KRW) to exit the consumer finance sector in South Korea. This business withdrawal is expected to secure $2 billion, making it a 'financially reasonable' decision.

According to the Wall Street Journal (WSJ) on the 8th (local time), Citigroup stated in a report submitted to regulators that it expects to spend between $1.2 billion (1.4 trillion KRW) and $1.5 billion (1.776 trillion KRW) to reduce related personnel.

The costs will be used for employee severance payments and other expenses. Citibank Korea has agreed on voluntary retirement terms for regular employees and indefinite-term dedicated staff who have worked for more than three years, compensating 100% of the remaining salary (base pay) until retirement up to a maximum of 700 million KRW. An additional 25 million KRW will be provided as start-up and job transition support funds.

In April, Citigroup announced plans to withdraw from retail banking operations in 13 countries, including South Korea. While it received about 40 final bids from 12 countries excluding South Korea, only Australia has secured a buyer so far.

Citigroup views the withdrawal from South Korea as a financially rational decision. WSJ stated, "Although it would have been preferable if Citibank Korea could have been sold like in other countries, Citigroup can secure $2 billion, which it was required to hold for consumer finance upon closure."

Citigroup plans to invest the capital secured in wealth management (WM) for high-net-worth individuals and corporate banking. Subsequently, it aims to return more money to investors through share buybacks and dividend increases.

WSJ explained, "The funds secured from Citibank Korea's withdrawal are expected to be used in financial hubs such as Singapore and Hong Kong," adding, "The WM business in Asia can generate significant profits."

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