No word of retrenchment from Citibank

The decision to exit retail banking in Malaysia is not expected to have any major impact on the country’s banking industry

By S BIRRUNTHA / Pic By MUHD AMIN NAHARUL

THE fate of employees in Citibank Bhd’s branches is still unknown following its parent company, Citigroup Inc’s, decision to exit retail banking in Malaysia, alongside 12 other markets across two regions, Asia, and Europe, the Middle East and Africa (EMEA).

The 12 other affected consumer franchises include Australia, Bahrain, China, India, Indonesia, South Korea, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam.

When contacted by The Malaysian Reserve (TMR), the bank’s official declined to comment on any retrenchment plan.

“We will keep everyone updated as we go along,” the bank said.

Citibank currently has a workforce of over 5,000 employees in Malaysia.

Many major banks were hit by the Covid-19 pandemic crisis that saw their global operations suffer, inevitably forcing them to plan for cost-cutting measures.

In September last year, Citigroup resumed job cuts of 1% of its workforce in the US.

Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said Citibank’s exit plan may be influenced by the need to stay relevant while keeping their economies of scale within a reasonable amount of cost amid the challenging environment from both the economic landscape and regulatory ecosystem.

He added that the proliferation of technology today has allowed more simplified transaction processes with greater security and productivity.

Mohd Afzanizam said, therefore, banks will need to find ways to navigate the challenging outlook by leveraging available resources.

“In the case of Citibank, they have the economies of scale and wide presence in various jurisdictions.

“Perhaps, they may have the upper hand to make changes and execute it almost seamlessly,” he told TMR in a phone interview last Friday.

However, Mohd Afzanizam said banks will continue to face challenges from the regulatory environment at the same time, as capital adequacy and liquidity, as well as risk management are expected to be more demanding and robust going forward.

He added that Citibank’s retail banking exit in Malaysia is not expected to have any major impact on the country’s banking industry and will further heighten competition among every player.

He added that in fact, the intensity of competition is likely to be more complex given the proliferation of technology and the emergence of financial techno- logy companies which has led to barriers to entry that appear to have been lowered to some degree.

According to Citibank CEO and MD Usman Ahmed (picture), the bank has been in Malaysia for over 60 years and the exit does not in any way dilute its long-term commitment to Malaysia or the Asia-Pacific region.

He added that with this strategic repositioning, the bank will be able to further invest its resources in significantly growing institutional business in Malaysia.

In addition, he said the group’s solutions centres in Kuala Lumpur and Penang remain an equally important operations hub for the bank, where they execute millions of financial transactions worth over US$29 trillion (RM119 trillion) annually for over 50 countries across the globe.

“There is no immediate change to our operations and no immediate impact to our colleagues as a result of today’s announcement by Citibank to pursue an exit from our consumer bank business in Malaysia.

“We will continue to serve our consumer banking customers with the same dedication as we do today,” Usman noted.

Citibank has been operating for more than six decades in Malaysia and it has also been the financial advisor and transaction bank for some of Malaysia’s largest companies.

According to its website, the bank has 10 branches in Malaysia, namely six in the Klang Valley, one each in Johor and Melaka, and two in Penang.

It banks 85% of the top 20 largest market cap companies and over 650 multinational corporates in Malaysia today.

When contacted by TMR, Citi- bank said it has raised over US$7.5 billion for its Malaysian clients in 2020.

It added that Citibank Malaysia has been awarded the ‘AAA’ rating by RAM Rating Services Bhd for the past 21 consecutive years.