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Citibank announced to stop credit card business. Why is foreign bank credit card business "opening high and closing low"?

帅冰握
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On January 23, Citibank (China) Co., Ltd. (hereinafter referred to as "Citibank China") announced on its official website that starting from May 6, 2024, Citibank China personal credit cards will cease trading functions and will no longer be able to be used for transaction purposes such as consumer payments. Meanwhile, Citigroup China will gradually cease providing related product rights and services.
At the same time, Citigroup China has signed an agreement with Fubon Huayi Bank that after Citigroup's credit card repayment services cease, the repayment and installment repayment services will be handled by Fubon Huayi Bank. That is, after May 6th, any installment repayment balance or outstanding payments due to consumption will be returned to Fubon Huayi Bank.
Public information shows that Citigroup first opened in China in 1902 and became one of the first global banks registered and established in China in 2007.
In September 2012, Citigroup China's credit cards were publicly listed independently, which put pressure on many domestic card issuing banks. However, more than a decade later, Citigroup's credit cards and several other foreign bank issued credit cards were all unlucky, with few highlights in their products and rights. They remained lukewarm in the market, in stark contrast to their initial complacency in obtaining card issuance qualifications.
Why are these foreign banks operating high and low in the Chinese market for credit card business?
According to Dong Zheng, an expert in the credit card industry, there are two main reasons. Firstly, foreign banks are required to comply with relevant financial laws and regulations in their respective countries and regions, as well as be influenced by their global business philosophy and style. The latter has the advantage of bringing mature business experience, but also brings constraints caused by insufficient response to local market changes. While maintaining a global business philosophy and style, it is bound to conflict with the local market.
The second is that foreign banks give the market a sense of "high-end" in terms of brand, reputation, image, etc., but they are also prone to problems of being out of touch, and their influence in service outlets, product rights, preferential activities, etc. appears to be extremely weak. Therefore, in terms of market customer positioning, foreign banks are relatively narrow, and with the increasingly mature credit card business of local banks, they are also vigorously competing for high-quality customer groups in the market. It is difficult for foreign banks to compete with local banks in terms of scale expansion.
It is worth noting that the cessation of credit card business this time is part of Citigroup's withdrawal from personal banking business in the Chinese market, and Citigroup's corporate business in China will not be affected.
As early as April 2021, Citibank announced that it would restructure its global personal banking business and withdraw from its personal financial business in 14 markets including Asia, Oceania and Europe (including the Chinese Mainland market and Taiwan, China market), and would plan to seek to withdraw from its personal business. In December 2022, Citigroup announced that it would gradually close its personal banking business in mainland China, but not involving its market leading corporate business.
In December 2022, Citibank made relevant announcements regarding the specific business arrangements for its withdrawal. In the past few months, the bank has carefully evaluated the possibilities of various options and ultimately decided to gradually shut down Citibank's personal banking business in China, covering bank cards, mortgage loans, personal loans, deposits, investments, insurance, and foreign exchange. Citigroup will gradually and orderly promote related work.
However, in the past two and a half years, Citi's credit card business has finally failed to find a "receiver" in Chinese Mainland, and had to delist in this way. Citigroup's personal wealth management business in mainland China was sold to HSBC Bank (China) Limited (hereinafter referred to as HSBC China).
In October 2023, Citigroup China announced that it had signed an agreement with HSBC China to transfer Citigroup's personal banking wealth management business in mainland China, which includes deposits held by individual clients, agent sales of funds/asset management plans, and overseas wealth management products and accounts for clients, excluding insurance products. At that time, Citigroup China expected to complete the business transfer in the late second quarter of 2024.
HSBC China stated that this acquisition covers the investment, wealth management assets, and personal deposits of Citigroup China's personal wealth management clients in 11 major cities across the country, totaling approximately $3.6 billion (as of August 2023).
HSBC China stated that the wealth management industry in mainland China has broad development prospects and has become one of the driving forces for HSBC to enhance its wealth management capabilities in the Asia Pacific region. This transaction will further consolidate HSBC China's market leading advantage among foreign banks and play a more critical role in the group's "Big Wealth Management Matrix" strategy in the mainland market.
After the transaction is completed, the acquired business will be integrated into the operation of HSBC China's wealth management and personal banking businesses. HSBC also plans to invite relevant employees of Citibank China who serve personal banking wealth management business to join HSBC's mainland team.
In addition, DBS Bank acquired Citigroup's consumer finance business in Taiwan, China in 2023, becoming the largest foreign-funded bank in Taiwan, China.
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