BOGOTA – Citibank is planning to sell the consumer banking operations it has operated for a century in Argentina, Brazil and Colombia as South America’s three biggest economies suffer a major downturn.
The New York-based bank said Friday in a statement that its decision was prompted by a desire to allocate resources where it can generate the best returns. The decision to eliminate its services affects depositors in more than 50 cities in the three countries.
The slowing of China’s economy has plunged all three into an economic down spiral with Brazil, the region’s biggest economy, struggling to emerge from its deepest recession since the 1930s. Foreign banks have taken a hit in dollar terms as the country’s currency has collapsed although profits overall continue to rise as a result of some of the world’s highest interest rate.
Although much smaller, its business in Argentina is storied.
Citibank in 1914 opened its first foreign branch in Argentina, when it rivaled Canada as an emerging agricultural powerhouse, and lumbered through decades of dictatorship, hyperinflation and pot-banging protesters outside its downtown headquarters during the country’s 2001 financial crisis when it was ordered to seize depositors’ accounts and make emergency loans to the government.
Argentina’s current problems, including inflation that’s forecast to surge to 30 per cent this year amid several years of stagnant growth, seem far more mundane by comparison. And after years of fighting over defaulted debt with leftist former President Cristina Fernandez, the doors seemed wide open under her successor, Mauricio Macri, a former businessman who has made attracting foreign investment a top priority.
Next month, President Barack Obama will become the first U.S. president to visit Buenos Aires since Bill Clinton.
Citibank said it would still continue servicing corporate clients in the three countries.
The bank in 2014 dropped consumer banking in 11 other Latin America nations.
Several of Citibank’s top executives over the years have been culled from their operations in South America, including former chairmen John Reed, who was raised in Argentina and Brazil to expat parents and oversaw the global bank in the 1980s and 1990s.