Citibank said new customers in the UAE will now need to keep more than 10 times as much money in bank accounts than previously required as it focuses on wealthy clients.
Citi, the New York-based financial group, said it will no longer accept new individual customers in the UAE that are unable or unwilling to maintain a minimum monthly average balance of Dh35,000 or the equivalent in other currencies. The new minimum balance can also be met through investments with the bank.
Dinesh Sharma, the Dubai-based head of consumer banking for Citi in the UAE, said however that the bank will not be closing accounts that were opened before June this year that do not meet the new criteria. A Citi spokesman said separately that the new policy was communicated to the central bank in April.
“We are not culling existing customers for balance requirements,” Mr Sharma told The National last month.
“Customer accounts may get closed for multiple other reasons,” he said. “There may be some suspicious activity on the account. The account could be dormant for a while. The customer could have moved to another country and is still keeping a chequebook which is not allowed by regulations.”
The previous minimum balance required on Citibank’s accounts in the UAE was Dh3,000, or its equivalent in other currencies.
The UAE is one of the countries that Citi is focusing on as it becomes more particular about where it focuses its firepower and what lines of business it gets into. In the past two years, the bank has exited its retail banking businesses in countries including Egypt, Turkey, Romania and Greece.
Citi wants to attract affluent customers to its UAE retail banking business, touting its ability to give its clients access to Citi accounts in other parts of the world. However, instead of dramatically expanding its physical presence on the ground, the bank says it will focus instead on digital banking in a bid to attract tech-savvy and wealthy customers who no longer place a premium on the branch network.
Mr Sharma said, however, that the new policy was not global and was only applicable in the UAE, where the bank has just five branches.
“Every market has their own standards,” he said. “A market in India will have its own standards, which I can’t comment on. There’s no global policy as such. Take, for instance, in Mexico, we are a local bank with 1,500 branches. You can service much more widely than if you have five branches. There’s no one-size-fits-all policy. It’s driven by a business focus.”
Mr Sharma disputed the notion, however, that the move to focus on more affluent customers had anything to do with rising compliance fees at a time when global banking regulations such as Basel III and Dodd-Frank in the US are ratcheting up costs for banks. Many of these regulations are aimed at protecting consumers and making sure that banks do not take unreasonable risks with their capital.
Still, expected costs of compliance in the Middle East this year are the highest globally, according to report released last month by Thomson Reuters. The report showed that in the Middle East, there was a 40 per cent expectation that senior compliance staff will cost significantly more this year.
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