Citibank attempts to prevent customer exodus

The headquarters of Citibank Korea in central Seoul / Yonhap

By Anna J. Park

After Citigroup announced last month it will cease consumer banking operations in more than a dozen countries around the world including Korea, Citibank Korea has been focusing on attracting new customers as well as retaining existing ones, hoping to prevent them from jumping ship due to uncertainties created by the possible sale of the bank in the near future.

In a move to keep its maximum valuation ahead of the sale of its retail banking division, Citibank Korea is currently holding various promotions, such as providing special annual interest of up to 2 percent for savings accounts opened by new customers who deposit more than 10 million won ($8,925). The bank is also giving out lottery presents ranging from hotel stays, luxury home appliances to coffee coupons to over 3,000 customers.

The bank also reduced interest rates of its non-collateralized loans as well as mortgages by 0.01 percentage point.

Industry insiders say such moves aim to assuage jitters among customers due to the bank's exit announcement and to retain as much business as possible. Since Citibank Korea's exit was officially announced, the number of applicants for new loans and savings accounts have dwindled.

Despite Citibank Korea's active moves to appease customers, uncertainties remain over the fate of the bank's retail division.

According to investment banking industry sources, Sunday, Citigroup Global Markets Korea Securities has been receiving Letters of Intent from possible buyers interested in taking over the retail banking division.

“While there are three possible options of the retail division ― sale as a whole, sale of a partial division, or a gradual shutdown ― we put our priority in the sale of the retail division as a whole,” said Yoo Myung-soon, CEO of Citibank Korea, during a recent talk with bank employees, according to local media outlets.

The CEO also said Citibank Korea will closely watch and follow potential buyers over the next month, adding that the retail bank's sale as a whole will be the best option for both employment stability and benefits to customer. The retail division of Citibank Korea consists of the retail banking and loan, wealth management, and credit card departments.

The bank officials were not available for further comment on Sunday.

However, it remains uncertain whether the sale of Citibank Korea's entire assets, debts, customers and staff will be feasible, given the bank's high price tag of over one trillion won and payroll costs.

The average salary of Citibank Korea's employees stood at 112 million won as of the end of last year, which is higher than the industry average due to the bank employees' seniority. The bank has not hired new employees en masse over the last decade.

“The bank will cautiously examine every possible scenario of the retail banking sale, as it plans to find the best option in the near future,” the bank's board of directors said in late April.