In furtherance of its strategy of shedding international
operations, on Friday,
) came up with the announcement of the sale of its retail banking
operations in Uruguay. The agreement has been penned with
Itau Unibanco Holding S.A.
), which will take over a portfolio of more than 15,000 customers
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Most assets in the deal are attached to Citigroup's credit-card
operations. Notably, these operations accounted for 6% of the
market in Uruguay in 2012. Financial terms of the deal were
Citigroup's decision to sell its retail banking operations in
Uruguay comes as part of its restructuring initiatives to counter
the fall in revenues. Aimed at increasing the efficiency of the
company's overall business, the initiatives include streamlining
operations and optimizing footprints across geographies.
With the completion of this agreement, the position of Itau
Unibanco will be consolidated in the card market in Uruguay.
Moreover, Itau Unibanco's existing leadership in the retail and
credit card markets with a diverse portfolio of products and
services and specialized platforms will be strengthened.
Earlier in May 2013, the Brazilian unit of Citigroup sold
Credicard, its non-banking credit card and consumer finance
business in Brazil for $1.37 billion (R$2.77 billion) to Itau
Moreover, in Apr 2013, Citigroup entered into a deal with
DenizBank, the Turkish unit of Sberbank, Russia's largest lender
to vend its consumer banking unit in Turkey. The transaction
price was undisclosed. Moreover, the deal is expected to be
completed in third-quarter 2013.
As per the terms of the agreement, DenizBank will take over 1.2
billion liras ($650 million) worth of assets and 1.5 billion
liras (about $800 million) of deposits of Citigroup's Turkish
Earlier in Mar 2013, at an investor conference in Boston, Mike
Corbat, the new chief executive officer (CEO) of Citigroup came
up with financial targets for the company, set to be achieved by
2015. Additionally, the CEO announced restructuring initiatives
for the markets where Citi operates its business.
Corbat aspires to earn a return of 10% on tangible common equity
in 2015, up from 7.9% earned in 2012. Moreover, return on assets
is expected in the range of 0.9% - 1.1%, up from 0.62% in 2012,
adjusted for certain items. Specifically, at Citicorp, efficiency
ratio is aimed to improve in the mid-50%.
Citigroup operates in numerous markets worldwide. Therefore,
Corbat has planned to restructure, reduce or exit some of the
operations in 21 markets globally to enhance returns. Though
names of such markets were undisclosed, but it was intimated that
most of them involve consumer businesses. Notably, in Dec 2012,
Citi announced its plans to exit consumer businesses in Uruguay,
Paraguay, Turkey, Romania and Pakistan.
With the ambition of achieving financial targets in 2015 by
restructuring the business, Corbat aims to provide clients with
products globally. Streamlining of operations and efficiency
improvements would aid Citi to accomplish its goals within the
Further, in a challenging operating environment with lower
returns and stringent capital norms, bolstering revenue has
become a challenge. Hence, many Wall Street banks are downsizing
their businesses and announcing layoffs.
Citigroup currently carries a Zacks Rank #2 (Buy). The other well
performing banks include
JPMorgan Chase & Co.
), with a Zacks Rank #2.