KUALA LUMPUR (Sept 29): Citibank Bhd’s planned exit of its consumer banking business in Malaysia will not affect its AAA/Stable/P1 financial institution ratings, said RAM Rating Services Bhd (RAM Ratings).

“We are of the view that parent Citigroup Inc’s (Citi) propensity to provide parental support to the bank remains strong given the bank’s strategic importance to Citi’s operations despite the planned withdrawal from the consumer banking business,” the local rating agency said in a statement on Wednesday.

The Edge on Sept 27 reported that at least three lenders are interested in acquiring Citi’s consumer banking business in Malaysia. Quoting industry sources, the report said they include UOB Group, the Standard Chartered banking group and Hong Leong Bank Bhd, adding that binding bids are due this week.

Citibank’s consumer business comprises credit cards, wealth management and mortgages.

RAM Ratings noted that the institutional clients group (ICG) business — Citibank’s remaining franchise in Malaysia after the exit of the consumer segment — is closely aligned with the group’s strategy.

Citi’s presence in Malaysia is further reflected by its investments in the two service centres of 37 solutions centres worldwide presently, that support its global multi-business processing solutions. These centres are based in Kuala Lumpur and Penang with an aggregate of over 3,000 employees.

“We expect the bank to remain highly integrated with its parent and continue to leverage Citi’s global network to serve institutional clients in Malaysia,” said RAM Ratings.

It added that Citibank will operate on a leaner balance sheet after exiting the consumer banking business, typical of a wholesale bank. “The pullout will mean a narrower business focus and potentially a more volatile earnings profile. That said, its ICG business has a strong franchise and considers multinationals, government-linked companies and large local corporates as core clients.”

RAM Ratings expects Citibank’s asset quality and profitability on a risk-adjusted basis to improve in view of its emphasis on top-tier institutional clients.

“The bank’s liquidity and funding profile should remain stable following the sale of the consumer business. Citibank derives the bulk of its funding from large corporate and institutional depositors, chiefly sourced via cash management operations.

“Capitalisation will remain strong, although it is uncertain how the sale proceeds of the consumer banking business will be redeployed by the group for Citibank’s domestic ICG business,” the rating agency added.