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| Citibank Korea’s headquarters in Seoul / Courtesy of Citibank Korea |
Citigroup is facing another setback in its ongoing attempt to sell its retail banking unit here: Citibank Korea’s weak earnings during the first half of the year.
In contrast to domestic commercial banks that enjoyed rapid rises in their first-half net incomes, Citibank Korea’s first-half net profit dropped 11 percent year-on-year to 80.1 billion won ($69 million), while its revenue also fell 11.6 percent to 276.3 billion won during the same period.
Citibank Korea CEO Yoo Myung-soon, who told the bank’s employees a month earlier that both consumer and corporate financing sectors were expected to show satisfactory results, attributed the poor performance to the challenging business environment prolonged by the COVID-19 pandemic.
Although the CEO emphasized that the bank has continued to enhance its overall customer experience in consumer banking through improvements in its mobile application and marketing strategies, the earnings decline seems to make Citibank Korea’s retail banking unit less attractive to potential buyers.
Market observers expect Citibank Korea to be unable to avoid reducing its workforce before the sale, given that the potential buyers have remained reluctant to guarantee the job security of all employees, due to concerns over labor costs.
According to industry representatives, Citibank Korea’s employees, whose average age is 46.5, were paid 120 million won a year on average, while workers of local commercial banks were paid less than 100 million won.
At this moment, the management has maintained the stance that its exit strategy will prioritize supporting its customers and employees, in an apparent attempt to convince Citibank Korea’s unionized workers, who have protested fiercely against the U.S. headquarters’ plan.
However, the union said late last month that its members can accept voluntary retirement. The amount of compensation given to retirees from the company has therefore been regarded as the key to Citigroup’s successful exit.
Citibank Korea plans to announce the specifics of its exit strategy sometime this month, after having negotiations with the union over the issue.
Meanwhile, Citigroup’s consumer banking unit in Australia was sold Monday to the National Australia Bank (NAB) for about $882.24 million. The Australian buyer agreed to the transfer of 800 Citigroup employees to the NAB.