Citi to close China private banking unit

By Samuel Shen and George Chen

SHANGHAI/HONG KONG (Reuters) - Citigroup Inc (C.N) will close its private banking unit in China, which had sought to attract funds from the country's fast-growing ranks of millionaires, as it streamlines its businesses, sources familiar with the situation said on Tuesday.

The three-year-old unit's operations, serving high net-worth clients, will be folded into Citigroup's consumer banking arm as part of an internal restructuring of its wealth management services in China, the sources said.

Several dozen employees at the unit will be transferred to other positions inside the bank, including the consumer banking business, said the sources, who declined to be identified as they were not authorised to speak to the media.

A Citigroup spokesman in Shanghai declined to comment.

The unit's closure comes as the New York-based lender, the third-largest U.S. bank by assets, is close to selling a stake in its Smith Barney retail brokerage business to Morgan Stanley (MS.N), aiming to shore up its balance sheet.

Both its private bank and Smith Barney are under Citigroup's wealth management group.

Citigroup's private banking businesses elsewhere in Asia, including Hong Kong and Singapore, are operating normally and it is unclear whether the decision to close the China operation would herald similar restructuring elsewhere, said the sources.

RUSH FOR WEALTH