Citigroup Considers Shrinking Banking Branch Network In U.S. & Canada

September 24, 2009 by · Leave a Comment
Filed under: Industry News 

It is surprising after Citigroup’s bid for Wachovia’s banking business, they are now looking to shrink their retail banking operation.  Usually, this is the “bread & butter” for any banks profits, using customer deposits to make new loans against.  With everyone calling for more loans to help create growth in the worst recession since The Great Depression.  This move seems counter-intuitive but I am not on the inside so there may be other facts that are leading management to this possible decision.  We will have to see how this pans out during Citigroup organizes itself.

Bloomberg, New York – Citigroup Inc. may sell or shut some of its 1,001 branches in the U.S. and Canada as the bank shrinks following last year’s $45 billion federal bailout, a person familiar with the matter said.

Citigroup, ranked third among U.S. lenders by assets, would narrow its North American retail focus to areas where it has higher branch concentrations, said the person, who declined to be identified because the plans are still under discussion. The bank’s network is clustered in New York, California, Miami, Chicago and Washington, D.C., with a smaller presence in Texas, Boston and Philadelphia.

Chief Executive Officer Vikram Pandit and his U.S. consumer chief, Teresa “Terri” Dial, have been studying ways to collect more deposits, which have become prized by banks as a source of funding after the global credit crunch drove up the cost of selling debt. The New York-based company’s network is one-sixth the size of those at Wells Fargo & Co. and Bank of America Corp.

“We’re on a very significant journey to make it simpler, more rewarding, and highly transparent to bank with us,” Citigroup spokesman Michael Hanretta said in an e-mailed statement. “We have a great deal to do.”

In January, when Pandit announced he planned to sell or shut “non-core” businesses including brokerage and consumer finance, he included retail banking among the ones he wants to keep. The others are investment banking, trading, corporate banking and transaction processing.

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