HSBC To Acquire Citigroup's US$3.6 Billion China Wealth Business

Citi announced on Monday that it has agreed to sell its onshore consumer wealth portfolio in China, including clients, assets under management (AUM), and deposits to HSBC Bank China.

According to a press release by the group, the transaction covers total deposits and investment AUMs of approximately US$3.6 billion. The banking giant has not disclosed the terms of the transaction, the deal is expected to close in the first half of 2024.

In a press statement, the US-headquartered bank said, "Today's announcement progresses the wind-down of Citi's consumer banking business in China, which was announced in December 2022." Citi first announced its plan to exit China consumer banking in April 2021 as part of the firm's broader global strategy refresh.

One must note that Citi's today's announcement does not include its institutional businesses in China, where the bank has a leading position.

The consumer banking business mainly served ultra-high net worth clients with deposit, fund, and structured product offerings.

Citi first opened in China in 1902 and became one of the first global banks to incorporate locally in 2007. Citi claims to serve 70% of Fortune 500 companies in the market, over 300 leading local enterprises, and many more emerging new economy companies.

The acquisition of Citi's wealth portfolio will help HSBC expand its presence in China, one of its key markets as Europe's largest lender vows to exit less profitable geographies to focus on its key revenue generator, Asia.

London-based HSBC recorded $27 billion in net new invested asset inflows in Asia for the initial six months of 2023, up 21% year on year (YoY), and over 35% of the value originates from outside Hong Kong, the statement said.

Since announcing its intention to exit consumer banking across 14 markets in Asia, Europe, the Middle East, and Mexico as part of its strategic refresh, Citi has now closed sales in eight markets including Australia, Bahrain, India, Malaysia, the Philippines, Taiwan, Thailand and Vietnam.

According to the press release, Citi plans to complete the sale of its Indonesia consumer business later this year. In addition to China, the previously announced wind-downs of Citi's consumer business in Korea and overall presence in Russia are in progress. Citi also announced that it will pursue an IPO of its consumer, small business, and middle market banking operations in Mexico.

Commenting on this development, Titi Cole, Citi's Head of Legacy Franchises, said: "We are taking important steps forward in exiting our consumer banking business in China and continue to make progress in our divestitures as part of our strategy to simplify Citi. This is an excellent outcome for our local consumer wealth colleagues and clients in China."