April 26, 2024

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[THE INVESTOR] Citibank Korea said on April 12 it will shut down 80 percent of its branches as part of its strategic move to focus on wealth management and digital banking, a plan strongly opposed by its labor union.

The Korean subsidy of Citigroup will shut down 101 of its 133 branches starting from July, the company said.

This is the second round of shutdown after 2014 when the bank closed 56 retail branches. 

"Branch is an outdated model given the rapid advancement in digital and the changing banking of our clients,” Citibank said in a statement. “Our new consumer banking strategy is in response to the changing preferences of our clients where 95 percent of transactions now happen outside a branch.”
At the same time, the bank said it will focus on its wealth management businesses.

It announced in end-March its goal to double its wealth management assets in the country by 2020 from the current US$3 billion. 

Part of the plan is to combine Citibank’s retail branches into bigger wealth management offices and expand online customer service centers.

The labor union demanded the management retract the plan, saying that “after closing branches, the company will place employees at de facto call centers.”

“The company says there is no restructuring but they are creating the environment,” an official of the labor union said. 

Citibank said that there are no plans for layoffs or voluntary retirement. "There will be no impact on staff numbers but the branch network will be optimized further as part of this transformation strategy with the increasing preference from our clients to bank via digital channels."  

“Citi employees -- especially those working at branches outside Seoul -- are very discouraged as most of the work will now be making phone calls or running around outside for sales.”

“The financial market is not in the best shape and the bank is not offering incentives, such as a voluntary retirement scheme under which you can get a lump sum equivalent to 48 months to 60 months of salary, so it is unlikely to see a massive exodus of workers,” the employee who wished to remain anonymous told The Investor.

The company with about 3,544 employees currently had slashed 650 jobs under a voluntary retirement scheme in June 2014.

Citibank Korea logged 212.1 billion won (US$185.40 million) net profit in 2016, down 6 percent from the previous year. Compared with 2011, its net profit halved from 456.8 billion won.


By Park Ga-young (gypark@heraldcorp.com)