Add General Motors Corp., Citigroup Inc. and Royal Bank of Scotland Group Plc. (RBS) to those dabbling in a spot of economic nationalism. All three firms need to prove that the substantial amounts of government aid they have either received or are still hoping for are being put to work at home. That has left some of their foreign operations out in the cold.
RBS, for example, which is now majority-owned by the UK government, is reportedly putting up for sale part or all of its Asia operations. These are, at least, going concerns and the bank hopes to raise some £10 billion (about Rs62,800 crore).
Bleeding firms: General Motors Corp. headquarters in Detroit, US. The firm’s Saab AB unit has filed for protection from creditors. Paul Sancya / AP
Citigroup has instructed its consumer lending business in Denmark to stop making new loans. And General Motors’ Saab AB unit has filed for protection from its creditors. Each had to do something. And they’re restructuring at home too—GM is cutting staff and brands in the US and Citi is selling a majority stake in its brokerage arm. GM’s treatment of Saab looks particularly harsh—especially as executives stubbornly held onto the business despite the likes of Jerry York, a former board member, insisting it was not core and an unneeded distraction.
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Of course, these moves are driven more by necessity rather than preference. But the implications are just as worrisome. The more that firms walk away from their foreign operations, the more economically vital international business flows will ebb—and at the extreme, the greater the risk that rival firms and governments will retaliate.