Our Strategy to Simplify: Lessons from Our Divestiture Journey
To better compete and win, Citi is on a mission to simplify. As part of our firm’s strategy refresh, we committed in April 2021 to exiting our consumer businesses in 13 markets in Asia, Europe and the Middle East – adding our Mexico franchise to the remit early last year and forming Legacy Franchises as the operating unit to house these businesses.
So where are we now? Despite macroeconomic headwinds and geopolitical complexity, we have made significant and steady progress. In 2022, we completed five sales in Australia, Bahrain, Malaysia, the Philippines and Thailand, and signed deals in four more markets. We also made strides in winding down our consumer businesses in Korea and wider operations in Russia, as well as recently announced the wind down of our consumer businesses in China.
With the future now written for more than half of our consumer businesses in Legacy Franchises, our team has taken stock of what we’ve learned and the leadership lessons that have contributed to our success so far:
1. Lead with excellence and empathy
To deliver a thriving business to a buyer, we needed to stay focused on the customer experience and maintain discipline and rigor around risk management. Ensuring this culture of excellence was key – and highly dependent on our colleagues.
In the 14 markets where we set out to exit our consumer businesses, our talented and loyal colleagues felt uncertain about their futures. It was up to our leaders across Legacy Franchises to demonstrate empathy and provide reassurance about what lies ahead. We focused on communicating frequently and transparently, treating every colleague with respect and sharing as much information as soon as we could. We spoke with countless employees and offered opportunities to learn about the organizations they’d be joining. By the time colleagues reached Legal Day 1 with the buyer, skepticism had turned to trust, and uncertainty became excitement.
Whether selling our business or winding down, we kept excellence and empathy at the forefront – staying focused on executing our divestiture mandate the right way so that colleagues left Citi with a strong sense of pride for all they accomplished.
2. Prioritize people
A key factor in reviewing potential buyers was how they would support our people. We focused on organizations that were committed to welcoming our colleagues, as well as those with inclusive cultures where they could grow careers. Since the divestiture process can take several months to years, we didn’t want colleagues to feel they were putting their careers on pause. We made sure that they continued to have access to all of the outstanding talent development programs available at Citi and were still given opportunities for promotion. We also launched upskilling programs to help colleagues in operations and technology gain additional skills needed for the future.
Retaining and engaging talent is so critical to ensuring we hand over a healthy business. By prioritizing colleagues, not only have we retained talent at rates far surpassing our expectations, but we saw overwhelmingly positive feedback in our annual engagement survey.
3. Adapt and pivot
When we announced we would exit our consumer businesses in Poland and Russia, we could not foresee the turmoil ahead in Eastern Europe. Last May, we made the decision to postpone the sale of our consumer business in Poland due to the war in Ukraine and its economic impact. Knowing we had a multi-year journey ahead of us, we’ve focused on operational excellence to ensure our business is strong when the time is right to pursue a transaction. Finding a buyer for our Russian business also proved near impossible. After exhausting all options, in August we started winding down both our consumer and local commercial banking businesses in Russia, selling select consumer banking portfolios where possible and making sure our colleagues, clients and partners were supported during the wind down process. We continue to work with our multinational clients to end nearly all institutional banking services by the end of Q1 of this year. At that point, our only operations in Russia will be those necessary to fulfill our remaining legal and regulatory obligations.
These weren’t outcomes we had imagined the year prior, but we had to adjust to changing conditions while staying focused on our mandate. Given the volatility of the world today, adaptability has been critical to our work and is a must-have skill for any 21st Century leader.
Looking ahead
Completing sales in India, Indonesia, Taiwan and Vietnam is on the docket for 2023, as well as further progress on our wind downs in Korea, Russia and China. We continue to pursue a dual process for Citibanamex’s consumer, small business and middle-market banking operations, which includes both the sale of the business as well as the potential for an IPO.
We remain laser-focused on delivering on our mandate and executing on our strategic priorities with excellence and empathy. I feel immense pride seeing all that our team has achieved and the positive momentum we’ve built for the journey ahead. With each transaction, we take a step forward in simplifying the firm, ensuring long-term shareholder value and redefining Citi’s success for the years to come.