Citigroup's decision to leave the mortgage-servicing business by the end of 2018, announced Monday, is part of a long-term strategy to increase returns and sharpen the bank's focus on its core retail customers in the United States, according to a Citi spokesman and analysts who cover the bank.

Under the Basel III regime, mortgage servicing has become a business requiring vast scale. Bulking up in mortgage servicing — Citi has been scaling back in recent years — would have run counter to the bank's motto of "simpler, smaller, safer and stronger," a vision for restructuring that is practically an article of faith among CEO Michael Corbat and other Citi executives.

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