Citibank is expected to give over its retail deposit, investment, personal loans, credit card and micro-enterprise financing (CitiBusiness) segments, the news agency reported, adding that Citibank Europe plc. reached an agreement with Erste Bank Hungary as well as its subsidiary Erste Befektetési Zrt.
According to the announcement the deal is not expected to be wound up before the fourth quarter of next year, and is still pending regulatory approval, which could be received around the end of 2015.
It is unclear how many Citibank customers Erste is able to retain but Erste will have to make efforts to be able to offer the same service levels and products as Citibank did, a source from the banking sector told the Budapest Business Journal.
The acquisition of the retail arm of Citibank in Hungary comes amid a consolidation process triggered by the government’s mandate to increase the share of Hungarian banks and decrease the number of commercial and retail banks in the country. Private banking, card operations and wealth management are considered some of the activities that remained lucrative after the FX loan conversion and bank levy imposed on the sector and Citibank has built a strong position in these areas since they entered the Hungarian market.
Citibank’s private banking clients also suffered substantial losses on Lehman Brothers bonds in 2007, which Citibank had marketed to its premium clients prior to Lehman Brothers becoming insolvent. Citibank, however, had maintained its focus in Hungary on retail and wealth management and private banking clients, the source noted.
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