Per editor: Li Zedong
According to the Shanghai Securities News on December 15, Citi announced that it will gradually close the personal banking business of Chinese mainland.
This is a follow-up to Citi's previous strategic transformation of global consumer banking. Back in April 2021, Citi announced a strategic realignment and transformation of its consumer banking business globally – in Asia, Europe, the Middle East and Africa, and later in Mexico, in 14 markets. This includes the Chinese mainland market.
Citi also said it will continue to pursue the possibility of selling individual businesses in Chinese mainland personal banking separately as it phases out its personal business.
However, Citi also reiterated its firm commitment to developing its corporate and institutional client business in China. Citi emphasized that "this business adjustment does not involve corporate and institutional client business, and will continue to firmly develop its Chinese mainland corporate and institutional customer business."
Photo by reporter Zhang Jian
Citi does not anticipate that the cost of closing its Chinese mainland consumer banking business will have a material impact on its operating results and financial condition, including estimates of the capital impact of the overall strategic transformation of the global personal business. The entire process will be conducted in an orderly manner in accordance with applicable laws and regulations, and Citi will ensure that its obligations to customers, employees and business partners are met.
It is reported that Citi's products and services Chinese mainland personal banking business include personal deposits, personal insurance, personal mortgages, personal investments, personal loans and personal bank cards. Citi will begin this work and will coordinate with all relevant parties, including regulators, throughout the process to minimize the impact on customers. The business change involved approximately 1,200 employees. Citi will also explore job opportunities locally or in its global network for employees who are willing to pursue other opportunities internally.
"Over the past few months, we have carefully evaluated the possibility of multiple options to finalize the implementation of the phasing out of Citi Chinese mainland consumer banking. Next, we will focus on achieving a smooth transition for our customers, business partners and employees. Titi Cole, CEO of Citi Global, responsible for all of the company's proposed business units, said.
"Citi came to China in 1902 to serve the local market and customers, and we will continue to serve corporate and institutional clients in China and grow our corporate business." Lin Yuhua, CEO of Citi China and President of Citibank (China) Co., Ltd., said.
It is understood that Citi's global consumer banking business has announced nine sales since announcing its strategic realignment in April 2021, and has completed transactions in Australia, the Philippines, Thailand, Malaysia and Bahrain. In addition, the previously announced closure of Citi's Korean personal banking business and Citi's overall Russian business is also underway.
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A number of investment banks such as Citi plan to cut year-end bonuses
According to CCTV News reported on December 5, as the end of the year approaches, Wall Street will usher in the "coldest winter". According to a Bloomberg report on the 2nd, under the pressure of market turmoil and a high interest rate environment, a number of Wall Street investment banks, including Citibank and Bank of America, are planning to cut the year-end bonus pool by as much as 30%.
Every December is the day when investment bank executives finalize their year-end bonuses, but this year, due to market tightening and aggressive interest rate hikes by the Federal Reserve, many lenders withdrew from large deal financing, and investment bank trading activities plummeted, and investment bank executives' year-end bonuses were naturally overshadowed. In the first nine months of this year, investment revenues from the five largest U.S. banks plunged 47 percent, or $18.8 billion. Johnson Associates Inc., a compensation consultancy, released a report last month predicting that bonuses for investment banks' general trading advisers could fall by 20 percent this year, while incentive compensation for employees in the bond and equity underwriting division would plummet 45 percent.
Li Daxiao, chief expert of Yingda Securities, said that the Fed released a sky-high amount of money to promote economic recovery, causing inflation in the United States and forcing the Fed to raise interest rates. Capital markets have also been hit hard. In such a market environment, the performance of investment banks is not satisfactory, and a large number of fund performance drawdowns, most of which have a drawdown rate of more than 30%.
The year-end bonus cuts for the investment banking business of Wall Street banks are another evidence of the sluggish performance of the primary market in the United States throughout the year. Bloomberg, citing people familiar with the matter, said Goldman Sachs plans to cut year-end bonuses for traders in the global market sector by a double-digit percentage. JPMorgan, Bank of America and Citigroup are also considering plans to cut the bonus pool of their investment banking employees by as much as 30 percent, insiders said. Groups including Citigroup, Bank of America and Barclays are even considering not giving bonuses to dozens of their underperforming banks. It is estimated that at Goldman Sachs, there may be more than 100 employees who do not receive annual bonuses.
Li Daxiao said: "It is a naked fact that the US financial sector has taken over the world. The United States occupies the high ground of the global stock market and bond market, and its financial dominance makes its every move affect the world. ”
Image source: Chen Mengtong (US Bureau) - China News Agency - Visual China - VCG111387733442
On November 30, Fed Chairman Jerome Powell said that he would slow the pace of interest rate hikes, and Bank of America Global Research expects the Fed to raise rates by 50 basis points in December and February next year. Li Daxiao said: "In the past two months, U.S. bond yields have fallen sharply, and U.S. stocks have also recovered from a low level. The Fed's policy shift may have a positive impact on the stock market. ”
Wall Street welcomes the "coldest winter"
On December 15, Beijing time, according to the Financial Times, Goldman Sachs is considering reducing the bonus pool of its more than 3,000 investment bankers by at least 40%, and its CEO David Solomon is trying to control costs by cutting more sharply than other Wall Street rivals.
The most senior executives in the U.S. banking sector will be forced to bear most of the bonus cuts, with salary cuts of 50 percent or more, because the bank has less flexibility in cutting salaries for junior employees, the people added.
The "Daily Economic News" reporter noted that last week, in order to cut costs, Goldman Sachs and Morgan Stanley, Citi, Barclays and other Wall Street investment banks resumed the "Wall Street ritual" of eliminating underperforming employees, that is, laying off 1%-5% of the employees they believe to be the worst performers before paying year-end bonuses, and paying more salaries and bonuses to the remaining employees. This comes after the coronavirus pandemic in 2020 triggered a two-year boom in trading activity, an annual layoff dubbed the "Wall Street ritual" that was put on hold for two years.
The Financial Times reported that Wall Street is experiencing its worst layoffs since the 2008 financial crisis, underscoring the cold winter for Wall Street banking, which paid many employees career-high bonuses just last year, backed by record-setting fees for IPOs and corporate mergers and acquisitions. This year, corporate mergers and acquisitions have dried up against the backdrop of aggressive interest rate hikes by the Federal Reserve disrupting international financial markets and geopolitical tensions caused by the Russia-Ukraine conflict, and the number of IPOs this year has more than halved as the stock market has fallen.
Daily economic news comprehensive CCTV news, Shanghai Securities News, every jing.com (reporter Zheng Yuhang)
Daily economic news