Citigroup Inc. said on Monday its exit from South Korea's retail market was expected to cost between $1.2 billion and $1.5 billion, most of which would be spent on severance packages.
Last month, Citibank Korea
announced a decision to close its consumer banking operations in phases, in line with the US banking group's efforts to streamline operations and revamp business strategies. As part of the measures, it plans to pull out of 13 countries, mostly in Asia.
Since then, the South Korean unit had tried in vain to find a buyer of its consumer banking business on conditions of the buyer taking over its employees.
It is now receiving early retirement applications from its Korean employees, offering up to 700 million won ($592,300) per employee in special retirement benefits.
The charges related to the closure will be incurred through 2021 and 2022, it said in a regulatory filing to the US Securities and Exchange Commission.
According to Reuters, Citigroup Chief Financial Officer Mark Mason said in a statement: "In terms of Korea ... the economics of winding down the consumer business are much more attractive than continuing to run the business."
He said the exit from South Korea's retail market would free up roughly $2 billion in equity. In total, its pullout from 13 countries is expected to release $7 billion in equity, which could be spent to boost other businesses such as corporate bank and wealth management.
Write to Nan-sae Bin at
binthere@hankyung.comYeonhee Kim edited this article
