Raiffeisen is the fifth-biggest bank in the central European country, a market that has helped profits at western banks after coming out of the global financial crisis relatively unscathed.
“Although, for the time being, our aim is to reduce our risk-weighted assets, we want to grow in selected markets which are in a strong position to generate sustainable returns,” Raiffeisen Chief Executive Karl Sevelda said in a statement.
“The Czech market is one of those, as it offers a stable economic and legal framework, there’s still catch-up and growth potential in the banking market, and our expectations regarding profitability and risk are positive.”
The companies did not release the price of the deal.
Citi said the financial terms were “not material” to the bank, adding it was focused on expanding its services to Czech companies, banks and public sector clients.
The third-largest U.S. bank almost a year ago announced plans to pull out of consumer banking in 11 markets, including Japan.
This month it agreed to sell its Hungarian consumer unit to Austria’s Erste Group Bank (ERST.VI).
Erste, which owns the second largest lender in the Czech Republic, had also been in contention for Citi’s Czech assets.
Raiffeisen reported second-quarter profit that beat market expectations in August and said it would complete its planned restructuring on schedule, despite delays in asset sales.
The Austrian group has 400,000 Czech clients.
Newspaper Lidove Noviny reported on Saturday that Raiffeisen had agreed to sell its loss-making internet banking business Zuno in the Czech and Slovak markets to Russia’s privately held Alfa bank.
Reporting by Francois Murphy and Robert Muller; editing by Louise Heavens and Jussi Rosendahl