Citigroup is expanding its corporate banking business in key Asian markets in an attempt to capitalise on the growth in importance of China in the region as well as fears over a retreat by the US from global trade.
The bank is adding people to its teams in the region, committing to extra lending and rolling out a new growth strategy for eight key trade corridors, according to Gerald Keefe, head of corporate banking in the Asia-Pacific (Apac) region.
Citi’s Asian push comes as other US banks including Morgan Stanley and Goldman Sachs are also hiring selectively in the region. This reverses a trend of recent years. International investment banks cut Apac headcount by 10-15 per cent between 2012 and 2015, according to data from industry benchmarking firm McLagan.
“The US is doing what it’s doing . . . and there will be a series [of] increasing bilateral trade negotiations,” said Mr Keefe, referencing the decision by the US to pull out of the 12-nation Trans-Pacific Partnership (TPP), which had governed trade relations with countries including Japan, Malaysia and Vietnam since 2009.
Beijing fulcrum
“Apac markets are all increasingly interlinked with one another,” Mr Keefe added. “That just winds up creating a very different picture in the next 10-20 years . . . [a picture which is] much more geared around China than one that has historically been geared around the US.”
To capture the predicted jump in trading activity within the region, Citi is adding 25 people to work in eight trade corridors between Korea, India, Vietnam, China, Japan, Hong Kong, Southeast Asia and Taiwan.
The staff will include 15 people redeployed from other parts of Citi’s Apac bank, and 10 new hires. Mr Keefe said Citi wanted “bankers on the ground who understand how to cover clients” trading across Apac.
Citi is also rolling out what Mr Keefe describes as an “integrated delivery strategy”. That means the bank will use local teams to offer clients a broad range of services such as cash management, trade finance, foreign exchange hedging, corporate loans and capital markets financing. Citi already banks many of these clients, but on a narrower range of services.
Citi hopes to double its growth in the selected trade corridors, Mr Keefe said, and add $1 billion-$2 billion in lending. Apac generates about one-quarter of Citi’s earnings, and is the bank’s largest region outside North America with revenues of $13.8 billion last year. In the first quarter, the bank grew its Apac loan book by $3 billion-$60 billion. – Copyright The Financial Times Limited 2017
