The US banking group continues to wind down its consumer banking business in China, whilst HSBC expands into this segment.

Citigroup has agreed to sell its onshore consumer wealth portfolio in China, including clients, assets under management and deposits to HSBC Bank China.   

The transaction covers total deposits and investment AuM of about $3.6 billion. Upon completion, the acquired business will be integrated into HSBC Bank China’s Wealth and Personal Banking operations. HSBC said it plans to extend offers to in-scope employees supporting Citi's local consumer wealth business in China.

The announcement progresses the wind-down of Citigroup’s consumer banking business in China, which was announced in December 2022, and delivers on Citigroup’s commitment to pursue portfolio sales. Citigroup first announced its plan to exit China consumer banking in April 2021 as part of the firm’s broader global strategy refresh.

"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 Citigroup," Titi Cole, Citigroup's head of legacy franchises, said. 

The announcement does not include Citi’s institutional businesses in China, where the bank said it has a leading position. Citigroup also said that it will continue to serve the needs of affluent to ultra-high net worth Chinese individuals through its regional wealth hubs in Singapore and Hong Kong, leveraging its International Personal Bank and Citi Private Bank businesses.

Since announcing its plans to exit consumer banking across 14 markets, Citigroup said it has now closed sales in eight markets, including Australia, Bahrain, India, Malaysia, the Philippines, Taiwan, Thailand and Vietnam. Citigroup also plans to complete the sale of its Indonesian consumer business later this year. The wind-down of its consumer business in Korea and overall presence in Russia are in progress too.

HSBC's strategy
Meanwhile, the latest transaction accelerates the expansion of HSBC’s wealth business in mainland China. HSBC said it has pursued initiatives to scale up its capabilities of its mainland China wealth customers, with a focus on the affluent and emerging affluent sectors. These include the acquisition of the remaining 50 per cent stake in HSBC Life China for full ownership, the launch of Global Private Banking across six cities in mainland China, and the ongoing buildout of a team of more than 1,400 Pinnacle mobile wealth planners. Earlier this year, HSBC said it became the first financial institution in mainland China to hold licences for both insurance brokerage and fund sales.

“Mainland China is central to our ambition to be the leading wealth manager in Asia. This investment will allow us to further build out our core wealth business in HSBC Bank China," Nuno Matos, CEO, wealth and personal banking at HSBC, said.

Despite increasing concerns over China’s slowing economy, David Liao, HSBC Asia Pacific co-CEO, said: “Our agreement to acquire Citi’s wealth management portfolio in China is a testament to our confidence in the country's long-term economic development. We're making investments across all areas of our business in this market.”

Mainland China accounts for almost 50 per cent of Asia’s financial wealth – an almost ninefold increase since 2006. Although China’s 2023 growth outlook has been revised downwards, HSBC expects the number of adults in mainland China, with at least $250,000 in net wealth, to double to around 351 million by 2030. Amidst this rapid growth, HSBC said that the Greater Bay Area spanning Guangdong, Hong Kong and Macau stands out as a wealth opportunity.