Citigroup to move head office to Dublin
(23 June 2015 – Ireland/United Kingdom) Citigroup plans to move the head office of its European retail banking operation from London to Dublin, which will mean lower costs and capital requirements, according to Reuters.
The bank reportedly wrote to customers to inform them the United Kingdom-based business, Citibank International Ltd, which operates a small number of branches across some 20 European countries, will be taken over by Dublin-based Citibank Europe Plc.
"From a strategic perspective for Citi, moving to a single pan-European bank is expected to reduce operational and regulatory complexity, capital requirements and cost," the company told clients.
A likely factor behind the move was to avoid the UK rules which require banks to hold a higher level of cash in reserve than other European countries.
These new restrictions have resulted in many of the big banks with head offices in the UK to warn they may move elsewhere.
The UK's banking industry is much larger in terms of its assets as a percentage of national GDP than that of other countries in Europe, which means bank failures could cause bigger economic ripples than elsewhere.
This has led the UK regulator to require banks to set aside more money than other European countries demand, analysts said.
A spokeswoman for the bank told Reuters the change in the retail bank's legal domicile and principal regulatory base would not involve job cuts and that the leadership of the European retail operation would continue to be based in London.
"The primary reason (for the move) is simplification, mirroring Citi’s strategy of creating a simpler, safer, stronger institution," she said.
Citibank International Ltd employed 4600 people at the end of 2014, filings show.
Citibank Europe Plc employed 4300 and currently focuses on providing transaction services to financial services and corporate clients.
The spokeswoman denied that the decision to rebase in Dublin was influenced by the possibility of the UK leaving the European Union following the referendum on EU membership which is due to be held in the next two years.
Also, although Ireland has become a magnet for international financial institutions thanks to its low tax rate, the spokeswoman said the restructuring was not tax driven.
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