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| Pandit on a mission |
| Written by Ellina Badri | |||
| Friday, 31 July 2009 10:27 | |||
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Citigroup Inc chief executive officer Vikram Pandit, on a whirlwind visit to three major regional markets, was on a mission to convey that message to the group’s stakeholders in Asia and to reaffirm its commitment to the region. Citi is picking up the pieces after being among the hardest hit by the US subprime fallout and, among other initiatives, aims to leverage on US companies seeking to participate in the economic recovery and the economic potential of Asia. “The numbers speak for themselves, Asia is an important part of Citi’s profitability. We’re proud to be part of Malaysia, having partnered with Malaysia since its independence,” Pandit told a media briefing here yesterday. He was in Singapore on Wednesday and Hong Kong before that, reportedly to boost confidence in the group’s Asian operations following the departure of its regional chief Ajay Banga, who left to become president of MasterCard Inc. Pandit said Asia had been, and would remain, an integral part of Citi, despite calls in its home market for it to scale back operations to manage risk. His visit to Malaysia coincided with Citibank Bhd’s 50th anniversary here. At the press conference, Pandit said its wholly owned subsidiary Citibank Bhd would apply to set up an Islamic subsidiary and set up four new conventional banking branches in the country early next year, as it seeks to strengthen its presence in the Asia-Pacific region. “We’ve applied for an Islamic banking licence, and that’s the next step for us. We’re looking forward to getting that Islamic banking licence, as it will extend our presence in Malaysia.  “We’re also planning on four new branches here next year, which is part of a longer-term plan that we’ve had,” he said. However, no mention was made of Citibank’s interest, if any, in setting up a brokerage here. Pandit said the bank’s presence here was significant, having captured a number of market-leading positions such as in its cards, trading, and wealth management businesses. “We feel fortunate to be part of the growth of Malaysia over the last many years, and plan to be part of the continuing growth here,” he said. Meanwhile, Pandit said the bank would maintain its core focus on helping American companies and individuals access global markets, especially as its clients needed the bank for its global presence “more than ever before”. “When I talk to companies in America, they want to export more, they want to be part of the global economy, and they come to us and say, help us in the emerging markets, help us around the world, so that’s a core part of the business, and we’re going to continue with our strategy of helping American companies and individuals access global markets. That’s unlikely to change,” he said. He said while Citi would maintain its large presence in its American home market, and play a key part in the recovery there, the bank was also one of the largest financial services players in the emerging markets. He added those markets were likely to grow “pretty well” over the next few years, with Citi’s profitability in the region expected to grow in tandem with it. Citi has been on an aggressive turnaround plan since it recorded billions of dollars in subprime losses, and only yesterday, the US government officially took a 34% stake in it, becoming the bank’s largest shareholder. This follows the completion of two exchange offers done to recapitalise the bank, with investors agreeing to swap US$32.8 billion of preferred securities for common stock, and the government agreeing to swap US$25 billion. The bank had also received US$45 billion from the Troubled Asset Relief Programme. “We have recapitalised Citi as a company; we finished the exchange offer that we launched a few months back. As a result of that recapitalisation, we are one of the strongest capitalised banks in the world. And we have not only the financial strength but the global reach to serve our clients,” Pandit said. Commenting on Citi’s asset sale plans, he said while there were a few businesses it was trying to sell, the bank would announce this when the time was right. He also said with the plans, the bank had set asset, risk, and cost reduction targets, each of which it had met, adding it had reduced its assets and cost by 25%, and reduced risk even more, since embarking on the plan 18 months ago. “We’ve made US$6 billion in the first two quarters of this year as a result of the sale of assets,” he said. Among its asset sales was the injection of its Smith Barney brokerage into a joint venture controlled by Morgan Stanley. Pandit said the bank’s top priorities continued to be ensuring sustainable profitability and to help its clients. On the outlook for the American market, Pandit said the bank was “quite constructive” about the world economic situation, as there were some encouraging signs which pointed towards stability, although more was needed to show a definitive recovery. Meanwhile, on Citibank Malaysia’s Islamic banking plans, the bank’s CEO Sanjeev Nanavati said it had been in discussions to set up an Islamic subsidiary, and it would be submitting a formal application to Bank Negara Malaysia soon. The bank currently operates its Islamic banking business under the “window” concept. He said the bank was “quite active” in the retail space, especially in providing mortgages, while its focus on Islamic corporate banking was to perform “cutting edge transactions, focusing on quality rather than quantity”. He added that the bank’s Islamic assets were currently a “small portion” of its total assets. On Citibank Malaysia’s financial performance, Sanjeev said it was expected to do “proportionately well” given its diversified business, and improving economic conditions. “We have a strong credit portfolio, the quality is very good, and we will continue to serve our clients. As they grow, we expect to grow with them. As the economy unfolds, we’ll have to see what that means for our business,” he said. This article appeared in The Edge Financial Daily, July 31, 2009.
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