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Citi maintains focus on Asia despite slowdown
Publication Date : 26-09-2013
Its economies are slowing and regulations are being tightened, yet American banking giant Citi still sees enormous potential in Asia and continues to invest in the region.
The bank's global chief executive, Michael Corbat, told local media here earlier this week that the regional slowdown is only natural as countries around the world start scaling back their fiscal stimulus programmes and interest rates begin to rise from near-zero levels.
"In times of transition, there's just going to be slowing in parts of the world," he noted.
"But the long view here is that this is one of the places where you clearly want to be continuing to make investments."
Corbat, who took over the top role at Citi in October last year, was in Singapore to attend the Monetary Authority of Singapore's international advisory panel meeting and the Singapore Summit.
Asia has become an increasingly bigger contributor to Citi's income. Twenty years ago, the region contributed 15 per cent to the bank's net income, but in the last quarter, it was 28 per cent.
Corbat expects this number to increase over time as Citi continues to rebalance itself.
This means investing more in its consumer banking business in emerging markets, where the middle class is expanding rapidly, and in technology so that there is a common operating system throughout the region.
It also means investing in the more developed markets such as Singapore and Hong Kong, where corporate banking is big business, Corbat said.
"Singapore has continued to be a hub of choice for multinational companies and as they continue to grow their gateway presence here, we're completely aligned with them in doing that," he added.
"And we are also aligned with the outbound champions that are going outside the region for their growth."
Such trends have continued to boost Citi's transaction services, cash management, trade finance, and commercial and investment banking businesses, he noted.
Wealth management is another growing area.
Citi Asia-Pacific CEO Stephen Bird said: "Singapore is already a developed and advanced economy but it's also one of the world's most attractive wealth hubs.
"Right now, it's converging on the No. 1 spot as the world's pre-eminent wealth hub. Hong Kong, likewise, has moved up into the top three. This reflects the shifting balance of the world's wealth creation towards Asia."
Corbat pointed out that the increased focus on Asia comes as Citi restructures itself in the wake of the 2008 financial crisis.
"Citi is a very different company today from what it was before the crisis. We have rebuilt our capital base and are now one of the strongest banks globally," he noted.
He added that Citi, which has been in the spotlight for being one of the banks that are "too big to fail", has been profitable since 2010 and is now a "simpler, smaller, stronger, safer institution".
While tightening regulations continue to pose a challenge for Citi, which operates in more than 100 countries, they are not dampening business, Corbat said.
"In many cases, regulators are working to solve very similar issues and we'd like to see coordination among regulators regionally and even globally.
"I think we're starting to see some of that but there's more work to be done."