 |
| Citibank Korea's headquarters in Seoul / Yonhap |
By Lee Min-hyung
Citibank Korea has picked KB Kookmin Bank and Toss Bank to manage its existing debtors while its retail banking operation here undergoes a phased shutdown.
The Korean subsidiary of the U.S. banking group said Wednesday that its retail customers can pay the interest and principal on their existing loans to KB and Toss from the beginning of July.
The combined loans extended to Citibank Korea's retail customers stands at around 8 trillion won ($6.17 billion). The two affiliated banks will be able to attract potential customers from Citi by operating the loan repayment program.
"Citibank's retail customers who received our non-collateralized loans can receive benefits ― such as preferential interest rate discounts ― by applying for the program at the two lenders' apps or sales offices," a Citibank Korea spokesperson said.
All eyes had been on which lender would attract Citibank Korea's retail customers at a time when the U.S. Federal Reserve and the Bank of Korea have entered a cycle of monetary tightening.
The Korean central bank has already raised its key rate to 1.75 percent, pushing up the average non-collateralized loan interest rate here. According to data from Korea's four largest commercial lenders ― KB, Shinhan, Hana and Woori ― the average interest rate on non-collateralized loans ranges from 3.11 percent to 5.51 percent. This is an increase of around 0.27 to 0.79 of a percentage point since the end of 2021.
Last year, Citibank decided to pull its retail banking business out of Korea in phases. Following the group-wide decision, the lender stopped all sales of its consumer banking products as of Feb. 15 this year.
The Korean subsidiary of the U.S. banking group also started accepting voluntary retirement applications in November, with more than 2,000 employees applying.
This enabled the lender to reduce expenditures by 15.4 percent in the first quarter of this year from a year earlier. But the phased shutdown of the retail banking service ended up weakening the firm's earnings during the same period when it chalked up 40.1 billion won in net profit, down 16.8 percent from the previous year.
After winding down its retail banking unit, the company plans to realign its business portfolio and focus on corporate financing.
![[INTERVIEW] Actor Ko Kyoung-pyo explains why he doesn't obsess over lead roles](https://img.koreatimes.co.kr/upload/thumbnailV2/f5f874a205d34561aeaad3874b18bf72.jpg/dims/resize/178/optimize)
