Citigroup's (C) Russia Subsidiary Completes Deal With Uralsib
Citigroup’s C Russia subsidiary, AO Citibank, completed the sale of a portfolio of ruble-denominated personal installment loans to Uralsib, a local commercial bank. Citigroup entered the agreement in October 2022, when it also said that it would transfer a portfolio of ruble-denominated credit card balances to Uralsib, subject to customer consent.
None of the firms has disclosed the financial details of the transaction.
Uralsib stated, “The acquired portfolio includes unsecured consumer loans, which going forward will be serviced by Uralsib Bank from the moment of purchase.”
Uralsib said that the loan portfolio has high credit quality, which allows it to increase its client base in Moscow and St Petersburg.
The divestiture underlines Citigroup’s efforts to wind down its consumer and local commercial banking businesses in and exposure to Russia, as announced in August. At that time, Citigroup expected to incur $170 million in charges over the period of winding down.
In October, the company said that it would end nearly all institutional banking services in Russia by the end of first-quarter 2023.
Our Take
For a long time now, Citigroup has been emphasizing growth in core businesses through streamlining operations internationally. The bank has said that it will wind down its UK retail banking business, and expand personal banking and wealth management businesses in the region.
In January 2022, the bank revealed plans to exit the consumer, small business and middle-market banking operations in Mexico. This is in addition to its major strategic action announced in April 2021 to exit the consumer banking business in 13 markets across Asia and EMEA, including Australia, Bahrain, China, India, Indonesia and Korea.
Since then, Citigroup has signed deals to sell consumer businesses in Indonesia, Taiwan, Vietnam and India. It has also completed the sale of the Bahrain, Malaysia, Thailand, Australia and Philippines consumer businesses. Citigroup is also ahead of its plans to gradually wind down the consumer banking business in South Korea.
Such exits will free up capital and help the company pursue investments in wealth management operations in Singapore, Hong Kong, the UAE and London to stoke growth. These efforts will likely help augment the company’s profitability and efficiency over the long term.
Over the past year, shares of Citigroup have lost 24.5% compared with a decline of 20.3% recorded by the industry.
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Currently, Citigroup carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Inorganic Growth Efforts by Other Firms
Raymond James Financial, Inc.’s RJF Canada business arm, Raymond James Ltd., along with its trust business, announced the acquisition of Vancouver-based Solus Trust Company Limited. Regulatory approvals for the deal are expected in early 2023.
The merger with Solus Trust will significantly accelerate growth and capacity of Raymond James’ trust business in Canada and its ability to deliver high-quality, independent trust and estate planning solutions.
RJF’s trust business in Canada was first launched as part of the company’s total wealth management offering in April 2020. It has a team of 17 professionals managing more than $400 million in assets on behalf of individuals and their families.
Washington Federal, Inc. WAFD announced its plan to enter the lucrative and “fast-growing” California market. The company signed an agreement to acquire Luther Burbank Corporation LBC and its wholly-owned subsidiary, Luther Burbank Savings, for $654 million.
Washington Federal is expected to use the deal as “a platform for growth in attractive California markets.” The company intends to enhance multi-family loan origination capabilities and expand commercial banking activities to Northern and Southern California. At present, LBC operates in California, Washington and Oregon through 11 full-service branches and seven loan production offices.
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