Multiple financial companies have expressed interest in acquiring Citibank Korea’s retail business by submitting letters of intent, but they have taken a negative stance toward retaining all employees, the lender recently said.

It has also put a complete pull-out of its retail business “in phases” as a viable option on the table as well, hinting that it would rather pursue an exit than carry out a subpar deal.

In an email sent to reporters, Citibank Korea said its “executives said that several financial institutions have submitted their letters of intent for acquisition as of June 3, but expressed reluctance toward keeping the retail businesses’ full workforce.” The announcement was made at Citibank Korea’s board meeting Thursday afternoon.

It has yet to disclose the list of potential bidders.

Despite potential bidders’ reluctance, Citibank Korea’s board has agreed that protection of employees “that have contributed to the growth and development of the bank should be prioritized alongside customer protection.”

While taking an “open-minded” approach to achieve a best-case scenario for the sale, the firm will also review steps to shut down retail operations “in phases.”

The retail business sell-off plan will be presented in July, Citibank Korea said, adding that the time frame could change depending on the circumstances.

The recent statement apparently presents an uphill battle for Citibank Korea’s retail market exit plan, with top banking groups here – KB, Shinhan, Hana, Woori and NH -- all expressing disinterest in an acquisition.

On top of that, OK Financial Group, a second-tier financial institution here that was discussed as a strong potential buyer, said it has not submitted a letter to Citibank. Daegu-based DGB Financial Group, another strong candidate, has been treading cautiously as well.

Citibank Korea has repeatedly hinted that selling its retail banking operations as a whole is its preferred move, but considering the current situation, there is a possibility it may break up its consumer business before selling it off.

The outlook for divisional sales seems cloudy, as Hyundai Card and Hana Financial Group recently denied the rumor that they were potential bidders for Citibank Korea’s credit card services.

“It’s a troublesome deal for both Citibank Korea and local financiers seeking to invest in the retail business,” an official at a local bank told The Korea Herald on condition of anonymity.

“Citibank Korea’s customers will not be pleased by the acquisition, if the retail business – especially wealth management -- is sold off to one of the lesser-tier firms – it just won’t carry the same value as doing business with a global financial giant,” the official added.

Citigroup has displayed a preference to sell off its retail banking business to top-tier firms, having previously sold its Japanese consumer banking operations to banking giant Sumitomo Mitsui Banking, reportedly for some 40 billion yen ($333 million) in 2014. Its retail banking business in Brazil was acquired by Itau Unibanco Holding, Latin America’s largest bank by market value, for $220 million in 2016.

Meanwhile, Citibank Korea’s labor union has been calling for its board members and executives to find a “stable bidder” to acquire its retail operations. As of last year, Citibank Korea operated 43 branches across the nation with 36 of them handling retail business. Its workforce consisted of 3,500 employees, with 939 of them working for consumer banking, in the cited period.

The nation’s financial authorities in April signaled its involvement in the sell-off, saying that it plans to monitor the related progress to minimize customer inconvenience.

Citibank Korea is a wholly owned subsidiary of Citibank Overseas Investment Corp., based in the US state of Delaware. It was launched in 2004, decades after Citigroup opened its first branch here in 1967.

Citibank Korea’s net profit in the January-March period fell 19 percent on-year to 48.2 billion won ($43.2 million) and its total assets shed 0.9 percent to 51.7 trillion won in the same period. 

By Jung Min-kyung (mkjung@heraldcorp.com)