Citi’s sale of Russian consumer unit stalls

Bloomberg

Citigroup Inc, in the midst of overhauling its businesses in Russia when the country went to war, has seen efforts to sell a consumer-banking unit there stall and is helping some employees transfer abroad.
The moves show how Vladimir Putin’s invasion of Ukraine has quickly made the future less certain for many of Citigroup’s roughly 3,000 workers in Russia — by far the largest presence of any major US bank in the country.
The shifting circumstances have temporarily upended the push to dispose of the consumer-banking unit, according to a person familiar with the matter. That raises the prospect the unit may eventually be wound down instead of passed to a competitor that would keep employing most of Citigroup’s workforce in the country. One problem is that potential suitors including Russian firms such as VTB Bank PJSC are now subject to sanctions imposed by the US government.
“We are continuing our previously announced efforts to exit our consumer banking business in Russia,” Ed Skyler, Citigroup’s head of public affairs, said in an emailed statement. “As we work towardss that exit, we are operating
that business on a more limited basis given current circumstances and obligations.”
Behind the scenes, Citigroup is telling international corporations that it’s committed to providing them financial services as they adjust their presence in Russia, in some cases suspending or shutting units and looking to move money overseas.
The bank’s commodities-trading desk has also been one of the few to continue to finance existing deals involving natural gas coming from Russia.
While such work could generate revenue for the bank and buoy its presence there, the firm is also facing another challenge: A small number of employees are asking to move abroad. The company is helping facilitate departures of expatriates and their dependents who want to leave, people familiar with the matter said, asking not to be identified discussing personnel matters.
Citigroup has a long history in Russia, establishing its first presence in the country on the eve of the Russian Revolution in 1917. But, over the past century, it has had to retreat and return multiple times, ultimately establishing a presence in about a dozen cities. The bank has grown to become Russia’s 18th largest by assets. It serves about 1,200 corporate and 500,000 consumer clients, according to a Citigroup spokeswoman.
That includes 600 clients of its so-called global-subsidiaries group — which provides regional services to the local subsidiaries of many of the world’s largest corporations. Chief Executive Officer Jane Fraser said last week that the bank is working with clients to reduce their exposure to losses tied Russia.
That includes many “American and European multinational corporations who we are helping as they suspend or unwind their business,” Skyler said. And while carrying out that work, Citigroup is assessing what to do with its own operations, he said. Citigroup, for its part, said last month it has about $9.8 billion of loans, assets and other exposure tied to Russia, local companies and their counterparties, as well as to the Bank of Russia. As part of its risk-management efforts, the company began hedging against the depreciation of foreign currencies, Chief Financial Officer Mark Mason said during the company’s investor day.
Still, under a severe stress scenario, the company could lose roughly $4.9 billion, or about half of its total exposure, Mason warned. “But it could also be a lot less than that, just depending on how the situation evolves, and we’ll continue to monitor it,” he said.