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(Repeats story first released earlier on Jan. 31)
* More countries likely to be put on departure list-source
* Citi is in 100 countries, with consumer banking in 40
* Half consumer loans ex-US from Mexico, Australia, Korea
* Its consumer business in many countries is very small
* Spin-off of Mexico's Banamex has been discussed in past
By David Henry
NEW YORK, Jan 31 (Reuters) - Citigroup Inc is lookingto pull out of consumer banking in more countries in an effortto lower costs and boost profits, according to two peoplefamiliar with the matter.
In December, Citigroup said it was withdrawing from consumerbanking in five countries - Pakistan, Paraguay, Romania, Turkeyand Uruguay - as part of an expense reduction plan that willsave $1.1 billion a year and eliminate 11,000 jobs. The cutswere one of Michael Corbat's first major steps as chiefexecutive, a position he took in October.
"There is more on the list," said a source familiar with thesituation.
The bank has been looking for months at countries, customersegments and products to cut, the source said, but declined toname any of the additional countries.
Sean Kevelighan, a Citigroup spokesman, said the bank isfocused on major cities with the highest growth potential forits consumer business and will continue to invest in itsfranchise and optimize its assets.
Citigroup is one of the most international of U.S. banks,serving consumers in 40 countries out of the 100 in which it hassome kind of presence.
Any cuts would likely represent a paring of the portfoliorather than a complete rethinking of the bank's commitment toglobal consumer banking.
Outside the United States, just three countries - Mexico,South Korea and Australia - account for half of the company'sloans to consumers and the bank's presence in many othercountries is tiny.
Investors said scaling down in some markets makes sense.
"If they're not going to have a significant presence, theyshouldn't be there," said Mark Mandell, portfolio manager atDalton Investments, which has $1.8 billion under management andowns Citigroup shares.
Selling any of the foreign assets now would be tough. Otherlenders around the world have also been closing foreign outpostsand buyers can be hard to find. London-based HSBC Holdings Plc, for example, has sold more than 40 businesses andother assets, such as credit card portfolios, globally since2011, but it has sometimes been a struggle to get the prices itwanted.
Citigroup has some extra complications, too. The bank isusing about half its capital to support bad assets and taxbenefits related to its huge losses during the financial crisis.
Speaking on a conference call with analysts and investorsearlier this month, Corbat said he intends to make regularassessments of "how and where and with whom" the companygenerates revenue, so the process of cost cutting is more "BAU,"or business as usual, instead of a one-time event.
Analysts unsuccessfully pressed Corbat to give more detailabout which other countries he might focus on to cut costs.
Corbat, who previously oversaw company operations in Europe, the Middle East and Africa, said that, over time,managers in different countries tend to expand by veering intotangential businesses and end up saddling the company withextraneous and inefficient operations. Other executives at thebank have made similar complaints in the past.
BANAMEX CONUNDRUM
One of the most radical alternatives Citigroup executiveshave discussed in the past is spinning off its Banamex unit, thesecond-biggest bank in Mexico, in a public stock offering there.Mexican regulators would likely allow a standalone Banamex tooperate with less capital, which would increase itsprofitability, one of the sources said.
But Banamex is already highly profitable and has a goodmarket position. Selling it would slow Citigroup's efforts tobuild capital, undercut its strategy of investing in emergingmarkets and would also mean parting ways with Banamex headManuel Medina-Mora. Corbat recently named him co-president ofCitigroup, which many inside the bank viewed as a sign he is animportant part of the new management team.
The global operations long have been both a blessing and aburden for company executives.
Being in many different countries gives the company valuablename recognition and an edge in winning and keeping customersfor one of its crown jewels, the Transaction Services unit thatmoves money internationally for businesses and governments.
But being in so many countries also means its operations arefar-flung and subject to myriad local laws and customs. Thoseproblems tend to be greatest in the consumer business. It isharder for the company to capture enough revenue to sufficientlyexceed the costs of running branches, a payments network andoffering products, such as credit cards.
Two-thirds of the 40 countries where Citigroup does consumerbanking provide no more than $2 billion of loans each toward thecompany's $1.86 trillion in assets. Those small operationsinclude Argentina, Thailand and Russia.
Citigroup's Brazilian unit plans to sell its Credicardconsumer finance unit as part of an effort to focus on the mostprofitable areas, according to a report on Wednesday from newspaper Valor Economico, which did not say how it obtained theinformation. A Citigroup representative declined to comment.
For the consumer businesses to succeed, Corbat said earlierthis month, they have to be capable of being served by commonsystems for lending, issuing credit cards and opening accounts.
The U.S. consumer bank is also a thorny question forCitigroup. It has much smaller operations in retail banking thanmany rivals - just about 1,000 branches, less than one-fifth asmany as JPMorgan Chase & Co Bank of America Corp and Wells Fargo & Co.
Normally, a bank with a relatively small business might lookto sell it, but shedding good assets in the United States isparticularly difficult for Citigroup, because the bank needstaxable U.S. revenue to benefit from the nearly $50 billion ofdeferred tax assets that it has on its books. (Reporting by David Henry in New York. Additional reporting bySteve Slater in London; Editing by Dan Wilchins, Martin Howelland Andre Grenon)
