Banco Popular of Spain will buy Citigroup’s Spanish retail banking and credit card unit, in the latest of signs that foreign lenders are exiting the country’s financial services market against the backdrop of the financial crisis.
Popular, which is the fifth largest bank in Spain by market value, announced on Monday it would absorb 950 members of Citi’s workforce and 45 of the bank’s branches as part of the agreement. Popular will also be taking over 2 billion euros or $2.7 billion in deposits and 1.1 million credit cards.
The Spanish financial services market has grown more difficult for foreign banks as a drawn-out slide of the economy and collapse of the property market has triggered a wave of partnerships among local banks.
While the country’s economy is bouncing back from distress, both local and foreign financial institutions are having a tough time returning to profitability, as non-repayment of loans remain near all-time highs.
Also, some lenders, including Popular, area taking advantage of the withdrawal of international competitors to cast their coverage wider.
Barclays of Britain is also searching for buyers for its retail bank in Spain while keeping a team of investment bankers in the country, Reuters has previously learnt from sources. A level of interest has been shown by some banks such as Caixabank.
Citi announced in a statement that it would still have Spanish presence, although with emphasis on expansion of its private bank. It would also focus on advising Spanish corporates and public sector clients via its investment bank.
Although Popular did not reveal how much exactly it was paying to acquire Citi’s assets in Spain, it said the deal would be closed after regulatory approval, which may be in the third quarter of this year.
According to Bloomberg, Citi’s chief executive officer Michael Corbat is trying to reduce costs and focus on what the lender called the world’s top 150 cities.
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