Key facts
- Over 90% of banking transactions in China moved to electronic channels between 2020 and 2023.
- Annual shortfalls for loss-making community-level branches exceed 2 million yuan.
- Goldman Sachs earned $67 million in China over five years, according to public data.
Foreign banks are refining their strategies in China, with some closing branches and sub-branches due to low returns and the dominance of state-owned lenders. Citi has exited its retail banking business, while others are focusing on digitalization, wealth management, and core clients. This trend mirrors a broader shift in China's banking sector, where large state-owned banks are also trimming their physical networks, closing over 300 branches in 2024. These reductions are driven by high operational costs and diminishing returns from physical branches, with many community-level outlets operating at a loss. While some state banks are reallocating resources to rural areas or service centers, joint-stock banks are largely maintaining or slightly increasing their branch numbers, emphasizing service quality and digital adaptation. Global banks, including Goldman Sachs and UBS, have also scaled back their China activities due to economic headwinds, regulatory scrutiny, and geopolitical tensions, leading to staff reductions and a contraction in strategic focus.