Citi To Sell Or Shutter Italian Private Bank, Slash Italian Workforce By Half

Wendy Spires

28 July 2009

Citi is to sell its Italian private banking business or close the unit if a buyer cannot be found, along with slashing its workforce in the country by around half, Sergio Ascolani, head of Italian banking, told the Financial Times in an interview.

Reports of Citi’s plans to offload its Italian private bank emerged last month; among the potential buyers in talks with Citi is Spain’s Banco Santander, according to Italian business newspaper Il Sole 24Ore.

Citi, which has been pummelled by heavy losses during the financial turmoil, announced in January its split into two separate business divisions called Citicorp and Citi Holdings. The latter includes a group of non-core businesses which the bank said it would seek to wind down or offload when appropriate as they do not sufficiently enhance the capabilities of Citi’s core business.

Citi’s Italian private bank is thought to have around €2 billion in assets under management. Citi has already sold and leased back its Italian private banking headquarters in Milan.

"It's absolutely rational, with current markets, to exit from businesses that are marginal and invest in areas where Citi is globally strong," Mr Ascolani was quoted by the FT as having said.

The report also said that Citi will cut its headcount in Italy from 1,000 to 500 staff by the end of the year – largely as a result of the closure of its consumer finance business in the country. According to the publication, Citi will focus on corporate and investment banking and global transaction services in Italy.

"We're not exiting Italy, just rationalising here," Mr Ascolani is reported to have said.

Since announcing its global restructure Citi has combined its Smith Barney brokerage unit in a joint venture with Morgan Stanley; Citi is the junior partner in the new entity, holding 49 per cent of Morgan Stanley Smith Barney.

Additionally, in May Citi announced the sale of Nikko Cordial Securities, the Japanese brokerage it acquired full ownership of last year, to Sumitomo Mitsui Banking Corporation for a total cash value of ¥774.5 billion . The transaction in expected to close in the fourth quarter of this year.

Citi is, however, adding to some private banking business areas. The bank is understood to be looking to hire experienced high net worth bankers as well as support staff as part of its plans to form a dedicated HNW service in the EMEA region, as was also reported in May.