Citigroup Sells Brazil, Argentina Units After 100-Year Presence

  • Itau pays $220 million for retail-banking business in Brazil
  • Citigroup to still maintain some operations in both countries

Citigroup Inc. announced sales of its retail-banking businesses in Brazil and Argentina over the weekend, paring its century-old presence in South America’s two biggest economies to help simplify its vast global operations.

Itau Unibanco Holding SA, Latin America’s largest bank by market value, agreed to buy the Brazil business for 710 million reais ($220 million), according to a regulatory filing. The sale will transfer 71 branches in Brazil as well as deposits, insurance brokerage, credit cards and loans. Citigroup has about 35 billion reais in deposits and assets under management in the country.

The price paid by Banco Santander Rio for an Argentina unit wasn’t disclosed in a separate filing. The New York-based bank, which gets more revenue from outside its home market than any of its U.S. competitors, will keep other operations in both countries.

Citigroup Chief Executive Officer Michael Corbat has been shrinking its retail footprint to simplify the bank, cut costs and boost returns. The company announced plans in February to exit retail businesses in Brazil and Argentina and said in October 2014 that it would drop consumer banking in 11 markets, including Peru, Costa Rica and four others in Central and South America. It has yet to disclose potential buyers of a Colombia retail unit that also was tagged for sale earlier this year.

International Expansion

Citigroup’s Argentina operations began in 1914 with the bank’s first non-U.S. branch, according to the company’s website. The company began banking in Brazil a year later.

Itau’s acquisition reinforces its presence in the wealth segment, which accounts for the majority of Citigroup’s customers in Brazil, Marcelo Kopel, Itau’s investor relations officer, said in an e-mail Saturday.

In Argentina, the transaction involves $1.4 billion in assets, credit cards business and personal loans. It also includes Citi Argentina’s retail brokerage and deposit accounts. The bank will keep its corporate and investment banking operations serving more than 1,300 clients.

Regulatory Review

Brazil Finance Minister Henrique Meirelles said from Washington that Citigroup isn’t existing Brazil; only its money-losing retail operations. The company isn’t selling its wholesale business, which includes investment banking.

“I was with the president of Citi yesterday and he assured me that Brazil is indeed a priority and that for areas in which Citi is strong globally, including Brazil, it will continue investing ever more,” Meirelles said. “It’s a strategy to focus on its operations that are strongest.”

The sale to Itau still needs to be approved by Brazil’s central bank and the nation’s antitrust agency, known as Cade. Regulators probably will give the acquisition an extra layer of scrutiny because the local market is already highly concentrated, Cristiane Alkmin Junqueira Schmidt, a member of Cade, said June 8.

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