Citi to grow in China as it cuts workers globally
0 Comment(s)
Print
E-mail China Daily, February 10, 2012
Citigroup Inc, a New York-based major player on world financial markets, will step up its presence in China even as it cuts staff globally, said Chief Executive Officer Vikram Pandit on Thursday.
"We are resizing certain businesses, but part of the resizing is to relocate the resources to where the growth is," he told China Daily.
The bank's "new stage" in China "requires investment. We would continue our investment in China", Pandit said. He added that the bank looks forward to adding staff in China.
In December, Pandit announced 4,500 job cuts worldwide as Citi sought to trim costs. The layoffs equal about 2 percent of the workforce. The company also aims to eliminate 3 to 5 percent of expenses each year.
"As a global company, we've been working very hard at connecting the emerging markets with each other.
"China is at the center of that (effort) as one of the fastest-growing economies in the world and our fastest-growing businesses," said Pandit.
He said a securities joint venture, the newly approved credit card business and a focus on helping Chinese enterprises around the world will mark a new stage for Citi in the world's second-largest economy.
Citi is "extremely" well-capitalized in China with sufficient returns, and it wishes to expand in the market in a very steady, methodical way as it did in past years, Pandit said.
He described Citi's attempt to launch a credit card business independently as a "natural solution" to the next stage after "successful" joint venture cooperation with Shanghai Pudong Development Bank Co Ltd, which began in 2003.
"It's very important for our retail banking business in China," he said. Citi China launched the retail banking services in 2002.
Citibank (China) Co Ltd announced on Monday it had won approval from regulators to launch its credit card business independently in China this year, making it the first non-Asian bank to do so.
In response to doubts that Citi's still-small network in China could support its credit card ambitions, Pandit said Citi's experience around the world in using branch-based and direct marketing to reach clients would help.
"Each of our credit card businesses started very small," he noted.
Citi has 13 corporate bank branches and 46 consumer bank outlets in 13 Chinese cities.
Pandit said he is also looking forward to the joint venture securities business that has received preliminary approval to develop underwriting and trading services in China.
He said the bank also wants to tap opportunities in the asset management business and corporate bond market, as the country is still at a very early stage of capital formation and many entrepreneurs need access to capital.
China is his second stop on a trip to mark Citi's 200th anniversary globally. He visited South Korea on Monday.
Emerging markets contributed 50 percent of Citi's core business last year, and Asia contributed half of the businesses in emerging markets.
"China is a big part of Asia and its influence goes beyond the boundaries," he said.
Citi reported lower-than-expected results in the fourth quarter, with revenue falling by 7 percent year-on-year to $17.2 billion and income declining by 11 percent to $1.17 billion.
Trading revenue fell 37 percent while investment banking revenue dived 45 percent.
Rating agency Standard & Poor's Financial Services LLC cut Citi's rating to A- from A in late November.
"The fourth quarter was a tough quarter. But that's a reflection of investment we are making around the world.
"It's also a reflection that the markets had been quite volatile," Pandit said.
Despite rising economic uncertainties, he said Citi is well-positioned to weather turbulence and has been making preparations if the eurozone debt problem doesn't work out in the expected way.
"Our direct exposure to Europe is extremely manageable, as 25 percent of our balance sheet is liquid in cash and tradable securities ... we are well-positioned to capture the growth where it is going to come from."
