Malaysian banking sector to remain sound, robust despite Citigroup exit move

The Malaysian banking industry is expected to remain sound and robust despite Citigroup Inc’s intention to exit from its consumer franchises in 13 markets, including Malaysia. — Reuters pic
The Malaysian banking industry is expected to remain sound and robust despite Citigroup Inc’s intention to exit from its consumer franchises in 13 markets, including Malaysia. — Reuters pic

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KUALA LUMPUR, April 16 — The Malaysian banking industry is expected to remain sound and robust despite Citigroup Inc’s intention to exit from its consumer franchises in 13 markets, including Malaysia.

The 12 other affected businesses are consumer franchises in Australia, Bahrain, China, India, Indonesia, South Korea, the Philippines, Poland, Russia, Taiwan, Thailand, and Vietnam.

MIDF Amanah Investment Bank Bhd head of research Imran Yassin Md Yusof said Citigroup’s move is more of an isolated case and due to the overall strategy that the group is taking rather than any sort of an industry trend.

“In fact, this may tone down some of the competitive landscape in the sector, but whether this will induce a trend of merger in the industry, we believe that this will not be the case.

“Also, it really depends on the individual banks’ strategy, risk appetite and assessment of the Malaysian market more than anything else,” he told Bernama.

Citigroup in a statement yesterday announced strategic actions to double down on wealth management and will operate the consumer banking franchise in Asia and Europe, the Middle East and Africa (EMEA) solely from four wealth centres including Singapore, Hong Kong, the United Arab Emirates, and London.

Commenting on this, Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said Citigroup’s exit move was motivated by the need to stay relevant, while keeping their economies of scale within a reasonable amount of cost amid the challenging environment both from the economic landscape and the regulatory ecosystem.

“The proliferation of technology has allowed more simplified transaction process with greater amount of security and productivity that really serve the purpose.

“That way, banks are able to offer tailor-made products based on the customers’ needs which in this case is wealth management,” he opined.

Mohd Afzanizam shared that the pandemic has clearly spelled out the challenges, and simultaneously, the opportunities to serve clients better, and understanding their needs is of paramount importance and this would make the individual bank stands out among the crowd.

Customers these days have become more demanding and learned, he said, and would ask for more advice especially on how the bank can assist them in achieving their financial goals.

“Therefore, it makes sense to focus on wealth management related products and services and having a physical branch may no longer be a pre-requisite to serve the clients.

“I think this would be the key consideration for Citigroup’s decision. It’s about treading a fine line between cost and revenue in the most practical sense,” he added. — Bernama

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