Citigroup Said to Delay Plan for Flagship Moscow BranchJason Corcoran
Citigroup Inc. is delaying plans to open a flagship branch on Moscow’s main street to the Kremlin, according to a person with knowledge of the matter.
The U.S. lender, which has about 50 branches in 12 Russian cities, was unable to secure the location it was seeking on Moscow’s Tverskaya street due to a dispute over pricing, said the person, who asked not to be named because the information is private.
New York-based Citigroup is still seeking an alternative location and hasn’t accelerated the search as sanctions against Russia depress economic growth, said the person.
“Citi continues to optimize its retail branch network around the world to focus on top cities,” the bank said in an e-mailed statement. The bank “will continue to open branches when the right locations are identified.”
Citigroup, which returned to Russia in 1992 after a 72-year hiatus, is one of a handful of foreign banks that have prospered in consumer banking following the collapse of the Soviet Union. It ranks fourth among foreign retail banks, with more than 1 million clients. The bank has scaled back its exposure to Russia this year as U.S. and European Union sanctions over Russia’s involvement in the Ukrainian conflict have pushed the economy to the brink of recession.
“Citi’s business is more well-rounded than most global banks in Russia,” said Alexis Rodzianko, president of the American Chamber of Commerce in Russia and former banker at Credit Suisse Group AG. “Most global banks have a base in Russia to facilitate big cross-border deals, which are on hold. Citi has that too but they have a real Russian bank with real customers, real cash machines and real commercial credit but it’s affected by the growth rate not being what it’s expected to be and they need to tighten their belt.”
The top three foreign lenders, France’s Societe Generale SA, Austria’s Raiffeisen Bank International AG and Italy’s UniCredit SpA, have expanded by making acquisitions while Citigroup has largely grown organically.
Citigroup, which employs about 3,500 people in Russia, cut its exposure to the nation 5.3 percent to $8.9 billion in the three months ended June 30, the bank said in a filing Aug. 1.
Citigroup opened three branches this year after closing three branches in 2013 in Moscow and St. Petersburg, according to statements on its website.
The U.S. and Europe widened sanctions in July after travel bans and asset freezes aimed at President Vladimir Putin’s inner circle and the Kremlin retaliated in August by banning a range of food imports.