Global group, Citi, has today announced it will withdraw from its consumer banking business in Australia, as well as 13 other markets.
Citi’s consumer business includes mortgages, retail banking and credit cards. Its new strategy will see the group better focus on investment banking, capital markets and advisory, markets and securities services, commercial banking and treasury and trade solutions.
Citi’s consumer division in Australia currently services 1.8 million people and is the fifth largest credit card issuer in Australia according to ABC News.
While Citi's retail banking division does not have subisidiaries, it has operated white-label credit cards for leading brands such as Qantas, Virgin Money, Bank of Queensland, Coles, Suncorp, IMB Bank, RACQ Bank, Auswide Bank and Kogan.
What does this mean for existing Citi customers?
Existing Citi customers for its retail banking, mortgage or credit card products may be wondering what this decision may mean for their personal finances?
The sale, which is still subject to regulatory approval, will not impact existing customers, according to Citi Australia CEO, Marc Luet.
“Citi's consumer bank in Australia is an attractive and profitable business, employing highly skilled and dedicated team members. Citi is committed to securing the best possible outcome for our employees and our customers."
"During the sale process, there will be no change in the way Citi serves its consumer banking customers. Consumer operations will continue to operate as they do today," said Mr Luet.
A recent AFR article noted that over 90 per cent of customers use the lender via digital channels. As of 2019, Citi closed its last Australian branch, highlighting its pivot to online-based banking and lending.
What happens if my bank is up for sale or goes under?
While not related to this announcement from Citi, the move may lead banking customers to wonder what may necessarily happen if a bank does sell its consumer division to another, or if it were to go under?
Thankfully, Australians are protected in this instance due to the Financial Claims Scheme (FCS). If a customer deposits funds with an Authorised Deposit-taking Institution (ADI), they is guaranteed cover on those funds up to $250,000 per person. If you have deposited more than this limit with an ADI across multiple accounts, you would still be limited to this $250,000 claim.
Not all financial institutions need to be ADIs to offer certain services, such as lending money. If you’re not sure if your current provider meets this criteria, you can view the complete list of ADIs covered under the FCS on APRA’s website.