Citi to sell off wealth unit’s trust administration services

Citigroup is taking a significant step to pare down its wealth management division with a plan to sell off its trust administration and fiduciary services business.

The move comes as the bank continues to pursue a strategy led by CEO Jane Fraser to enhance the bank's performance, cut costs, and simplify its global operations.

Citigroup the decision in a statement on Friday, Reuters reported.

In a statement, the bank said the move aims "[t]o enhance our focus on delivering the wealth structuring advice that matters most to our global clients."

The announcement comes on the heels of apparent difficulties in the leadership of the wealth management unit. Just a few days prior, it was revealed that Don Plaus, head of North America for Citi’s private bank, is leaving the organization just four months after he joined the firm.

His departure, reported by Barron’s and based on unnamed sources, has sparked concerns regarding Citi’s ability to achieve its growth targets in wealth management. The division is a key piece of Fraser's strategy, which includes refocusing on wealth management as the bank exits international retail banking markets like India, China, Russia, and Mexico.

Some have raised questions regarding the wealth unit’s sustainability. In one June report, analysts at Bank of America highlighted the business’s 94 percent efficiency ratio for the 2023 fiscal year. That number, significantly higher than the industry average of roughly 60 percent, suggests the division hasn’t been leveraging its resources effectively.

“While potential synergies tied to its corporate relationships should be an opportunity,” the team said it would “not be surprised” if Citigroup “ends up pursuing strategic alternatives, especially if peer-like profitability remains elusive.”

Still, the bank seems far from ready to give up on the division, saying it has shown some signs of progress of late. In its second-quarter earnings call, Fraser noted that the division was “starting to improve.”

The bank reported a 2 percent year-over-year increase in wealth management revenue, including a 13 percent rise in non-interest revenue, attributed to higher fees from new client investments and market valuations.

As part of its ongoing reorganization, Citigroup has also been active in recruiting talent to bolster its wealth management team. Andy Sieg, who was brought over from Bank of America last year to lead the division, has been pivotal in these efforts.

In addition to hiring Plaus, Sieg recently brought in Keith Glenfield, another former Merrill Lynch executive, to head Citi’s investment solutions.

Citi has also announced the appointment of Yeo Wenxian as the new head of wealth for Asia South. She will join the bank in November, pending regulatory approval, and will also serve as CEO of Citibank Singapore Limited.