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Citigroup to Divest Trust Service Unit, In Line With Overhaul Goals (Revised)
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Citigroup Inc. (C - Free Report) has agreed to divest its global fiduciary and trust administration services business, Citi Trust, to JTC, one of the global professional services providers, for $80 million. This strategic move aligns with the bank’s focus on concentrating resources in areas that drive growth in its wealth business.
Citi Trust, known for its comprehensive trust solutions across seven key jurisdictions like New York, Delaware, South Dakota, Jersey, Singapore, Switzerland and the Bahamas, serves over 2,000 ultra-high-net-worth clients with more than $70 billion in assets under administration.
JTC will leverage Citigroup’s experienced senior management team with more than 150 years of collective trust experience, supported by a skilled global employee base.
Ida Liu, head of Citi Private Bank, said, “The decision to sell our personal trust administration and fiduciary business allows us to focus our resources on areas that will create impact for our global clients and drive growth for our Wealth business. We will continue to provide clients with leading investment management, wealth planning, lending and banking services, while JTC will provide the highest quality trustee and fiduciary services.”
The Latest Move Aligns With Citigroup’s Strategic Overhaul
This divesture aligns with the restructuring efforts undertaken by Citigroup's chief executive officer, Jane Fraser, to enhance the performance of the bank, reduce the cost base and streamline its operations.
The bank had divested several international retail banking businesses earlier in this strategic overhauling move.
These exits are in addition to the major strategic action announced in April 2021 to exit the consumer banking business in 14 markets across Asia and the EMEA. The company has already closed sales in Australia, Bahrain, India, Malaysia, the Philippines, Taiwan, Thailand, Vietnam, Indonesia and China.
This will free up capital and help the company pursue investments in wealth management operations in Singapore, Hong Kong, the UAE and London to stoke fee income growth.
Conclusion
Through this strategic exit, C will enhance its focus and boost its operational efficiency within its key business segments.
Divesting its non-core businesses to focus on its core operations has already shown positive results for the bank. In the second quarter of 2024, revenues, net of interest expenses, increased 3.6% compared with the year-ago quarter. In the Wealth segment, revenues were $1.81 billion, rising 2% year over year.
This strategic focus will likely lead to enhanced profitability in the future, as Citigroup focuses its resources on high-growth areas. However, the current volatile macroeconomic background could present challenges, potentially acting as a headwind in the process.
Shares of Citigroup have gained 0.7% over the past six months against the industry’s growth of 7.4%.
According to a Reuters report citing a source familiar with the matter, The Goldman Sachs Group, Inc. (GS - Free Report) is close to finalizing a deal to transfer its General Motors (GM - Free Report) credit card business to Barclays as part of its strategy to enhance its focus on consumer services.
GS’ decision to quit the commercial agreement with GM, which had approximately $2 billion in outstanding balances, is part of the firm's strategy to restrict its focus on the strength of investment banking (IB) and trading operations.
(We are reissuing this article to correct a mistake. The original article, issued on September 17, 2024, should no longer be relied upon.)
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Citigroup to Divest Trust Service Unit, In Line With Overhaul Goals (Revised)
Citigroup Inc. (C - Free Report) has agreed to divest its global fiduciary and trust administration services business, Citi Trust, to JTC, one of the global professional services providers, for $80 million. This strategic move aligns with the bank’s focus on concentrating resources in areas that drive growth in its wealth business.
Citi Trust, known for its comprehensive trust solutions across seven key jurisdictions like New York, Delaware, South Dakota, Jersey, Singapore, Switzerland and the Bahamas, serves over 2,000 ultra-high-net-worth clients with more than $70 billion in assets under administration.
JTC will leverage Citigroup’s experienced senior management team with more than 150 years of collective trust experience, supported by a skilled global employee base.
Ida Liu, head of Citi Private Bank, said, “The decision to sell our personal trust administration and fiduciary business allows us to focus our resources on areas that will create impact for our global clients and drive growth for our Wealth business. We will continue to provide clients with leading investment management, wealth planning, lending and banking services, while JTC will provide the highest quality trustee and fiduciary services.”
The Latest Move Aligns With Citigroup’s Strategic Overhaul
This divesture aligns with the restructuring efforts undertaken by Citigroup's chief executive officer, Jane Fraser, to enhance the performance of the bank, reduce the cost base and streamline its operations.
The bank had divested several international retail banking businesses earlier in this strategic overhauling move.
These exits are in addition to the major strategic action announced in April 2021 to exit the consumer banking business in 14 markets across Asia and the EMEA. The company has already closed sales in Australia, Bahrain, India, Malaysia, the Philippines, Taiwan, Thailand, Vietnam, Indonesia and China.
This will free up capital and help the company pursue investments in wealth management operations in Singapore, Hong Kong, the UAE and London to stoke fee income growth.
Conclusion
Through this strategic exit, C will enhance its focus and boost its operational efficiency within its key business segments.
Divesting its non-core businesses to focus on its core operations has already shown positive results for the bank. In the second quarter of 2024, revenues, net of interest expenses, increased 3.6% compared with the year-ago quarter. In the Wealth segment, revenues were $1.81 billion, rising 2% year over year.
This strategic focus will likely lead to enhanced profitability in the future, as Citigroup focuses its resources on high-growth areas. However, the current volatile macroeconomic background could present challenges, potentially acting as a headwind in the process.
Shares of Citigroup have gained 0.7% over the past six months against the industry’s growth of 7.4%.
Image Source: Zacks Investment Research
Currently, C carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Another Bank Taking a Similar Step
According to a Reuters report citing a source familiar with the matter, The Goldman Sachs Group, Inc. (GS - Free Report) is close to finalizing a deal to transfer its General Motors (GM - Free Report) credit card business to Barclays as part of its strategy to enhance its focus on consumer services.
GS’ decision to quit the commercial agreement with GM, which had approximately $2 billion in outstanding balances, is part of the firm's strategy to restrict its focus on the strength of investment banking (IB) and trading operations.
(We are reissuing this article to correct a mistake. The original article, issued on September 17, 2024, should no longer be relied upon.)