By Kim Rahn
Citibank Korea will cut the number of its branches by 30 percent this year as part of a restructuring plan.
Officials of the bank said Tuesday that it will consolidate 56 branches, reducing the number from the current 190 to 134 by the end of the year. The bank already closed 22 branches last year.
They said the restructuring came about because more people are using banking services through mobile phones or the Internet instead of visiting branches in person. Low profitability from a long-term low-growth era has also brought the new strategy, they said.
"Citibank's Korea business activities will focus on six metropolitan cities nationwide ― Seoul, Incheon, Busan, Daegu, Daejeon and Gwangju," said a Citibank Korea official.
"Our main target will also be affluent urban clients, with the services and products focusing on wealth management," he said.
The official said the move is in line with the bank's global consumer strategy, adding that Korea is Citi's third-largest retail franchise in the world and generated more than $1.5 billion of revenue in 2013.
Citigroup has downsized its consumer banking in some countries and focused on wealthy clients in major cities to improve returns.
The Korean unit said that 90 percent of transactions here are made online, with the need for offline branches getting smaller. "The market strategy should reflect changing consumer needs," he said.
Citibank Korea has already run 28 "smart branches," where customers use financial services through digital devices with a minimum number of staffers being stationed there to assist clients' use of the services. The lender said it will improve its mobile banking systems over the next 12-18 months.
The branch closure is expected to bring a massive "voluntary retirement" of workers. Rumors are that about 600 will have to leave the company.
"Voluntary retirement is what we have to discuss with the labor union. We'll try to minimize the impact on staffers, but it is true that we'll have surplus manpower and some of them will have to leave," said the official.
The Korean unit's net earnings have decreased amid low interest rates and the economic slowdown _ its net earnings dropped from 456.8 billion won ($434.2 million) in 2011 to 238.5 billion won in 2012 and 219.1 billion won in 2013.
Citibank Korea will cut the number of its branches by 30 percent this year as part of a restructuring plan.
Officials of the bank said Tuesday that it will consolidate 56 branches, reducing the number from the current 190 to 134 by the end of the year. The bank already closed 22 branches last year.
They said the restructuring came about because more people are using banking services through mobile phones or the Internet instead of visiting branches in person. Low profitability from a long-term low-growth era has also brought the new strategy, they said.
"Citibank's Korea business activities will focus on six metropolitan cities nationwide ― Seoul, Incheon, Busan, Daegu, Daejeon and Gwangju," said a Citibank Korea official.
"Our main target will also be affluent urban clients, with the services and products focusing on wealth management," he said.
The official said the move is in line with the bank's global consumer strategy, adding that Korea is Citi's third-largest retail franchise in the world and generated more than $1.5 billion of revenue in 2013.
Citigroup has downsized its consumer banking in some countries and focused on wealthy clients in major cities to improve returns.
The Korean unit said that 90 percent of transactions here are made online, with the need for offline branches getting smaller. "The market strategy should reflect changing consumer needs," he said.
Citibank Korea has already run 28 "smart branches," where customers use financial services through digital devices with a minimum number of staffers being stationed there to assist clients' use of the services. The lender said it will improve its mobile banking systems over the next 12-18 months.
The branch closure is expected to bring a massive "voluntary retirement" of workers. Rumors are that about 600 will have to leave the company.
"Voluntary retirement is what we have to discuss with the labor union. We'll try to minimize the impact on staffers, but it is true that we'll have surplus manpower and some of them will have to leave," said the official.
The Korean unit's net earnings have decreased amid low interest rates and the economic slowdown _ its net earnings dropped from 456.8 billion won ($434.2 million) in 2011 to 238.5 billion won in 2012 and 219.1 billion won in 2013.
