Citi to end nearly all services in Russia by end Q1 2023, not expecting costs to be material

MOSCOW. Oct 14 (Interfax) - U.S. financial services giant Citigroup will be ending nearly all of the institutional banking services it offers in Russia by the end of the first quarter of 2023.

"Going forward, Citi's only operations in Russia will be those necessary to fulfill its remaining legal and regulatory obligations," the group said in a statement.

"At this time, Citi does not expect the costs to be incurred in connection with this action to be material," it said.

Citigroup announced in August that it will begin winding down the Russian retail business and work with Russian small and medium enterprises (SME) in the third quarter. The process will affect about 2,300 employees, 15 branches and offices, as well as retail services such as consumer loans, credit cards and deposits, and brokerage and depository services for retail investors.

Citi, as part of its updated global strategy, announced in April 2021 that it had decided to sell its retail business in 14 countries, including Russia. In March 2022, after the start of the military operation in Ukraine, the group extended the plans to sell the business in Russia to its SME business as well. The Russian Citibank stopped taking on new clients.

Before the start of the military operation, Citi's retail business drew interest from Alfa Bank, Raiffeisen Bank and state bank VTB , which in August 2021 sent Citibank a nonbinding legal offer. VTB CFO Dmitry Pyanov told Interfax in January 2022 that the bank no longer expected to buy Citi's retail business in Russia. Alfa Bank senior management also said that the bank had lost interest in Citi's retail business.

The group continued attempts to sell the retail business in Russia after the start of the military operation in Ukraine on February 24. The Financial Times reported that negotiations were held with several potential buyers, including Expobank, insurer RESO-Garantia and Rosbank . But due to factors that complicated the sale, the group decided to wind down the retail and SME operations in Russia.

At the end of the second quarter of 2022, Citi's presence in Russia was estimated at $8.4 billion in financial terms, with the retail and SME business accounting for about $1 billion.

Citi's costs related to the wind-down of these businesses are expected to total about $170 million, primarily over the next 18 months and largely due to expenses on restructuring, termination of contracts with suppliers and other payments associated with this process.