Rumors are flying that Citibank (NYSE: C) will be pulling out of all but a few major metropolitan areas, but contrary to recent indications in the Wall Street Journal, it seems that its branches nation-wide will be largely unaffected.
The report that surfaced Wednesday indicated that Citibank might leave Pennsylvania, Massachusets and Texas to focus on its six biggest markets, which are Los Angeles, San Francisco, Chicago, Miami, New York and Washington D.C. The article from the WSJ cited “unidentified sources” and “people familiar with the strategy”. The article stated that the plan would be likely presented to the bank’s board next month. An article from Bloomberg also suggested that this plan was under consideration from an un-named source.
Currently Citibank has about 1,000 branches, far fewer than Bank of America (NYSE: BAC) that has over 3,000 branches. The proposed move would significantly cut costs for Citibank and leave the company’s most profitable branches to operate.
Since Citibank received a $45 billion federal bailout, it’s been under severe pressure to sell assets and shrink to generate new capital and become profitable. Currently the government has a 34 percent stake in Citigroup which is equal to about $25 billion worth of debt. Citibank is hoping to raise capital to pay-off its debt to the government.
The rumors of a major-pull back may be premature though. It appears that Texas and other parts of the country will have avoided a Citibank pull-out for now. In a memo leaked on Thursday, chief executive officer, Vikram Pandit, stated that he didn’t anticipate any “dramatic changes to our footprint” in retail banking.
Pandit announced that Citibank was planning to sell or shut-down noncore businesses, such as consumer finance and its brokerage operations. During that time, Pandit stated that he had hoped to keep its retail banking operations.
