In an effort to strengthen its commercial banking operations in
the Asia-Pacific region,
) intends to hire around 100 bankers, according to a
report. The company, which has presence in more than 100 countries,
operates commercial banking business in 32 countries with around
What Citigroup Aims for Asia-Pacific?
This hiring represents an increase of 10% in the company's employee
base in its Asia-Pacific commercial banking business. The company
aims to serve an array of products, primarily to the small to
medium-sized corporate clients. Its target group focuses on clients
with annual sales in the range of $10-500 million. Apart from
providing various financial products, the company proposes to
employ the newly hired staff in offering additional services
including foreign exchange and cash management to its clients.
According to Citigroup's Asia-Pacific commercial banking head
Ashish Bajaj, the company aims to grab a huge business through
commercial banking clients with this hiring. The target clients
with international exposure will be offered with loans, foreign
exchange, cash and trade products.
Citigroup also contemplates to strengthen its relationship with
start-up companies that have prospects of evolving into larger
firms. The company intends to target suppliers to big Asian firms -
Lenovo Group Ltd, the Chinese firm and India-based Tata Motors Ltd.
Citigroup proposes to start commercial banking in Vietnam, and add
18 employees, bringing its total staff base to 618 there. The
company will lay emphasis on companies from nations such as Korea
and Taiwan that have manufacturing businesses in Vietnam.
What Led to the Latest Move?
Citigroup is not the only bank to venture further into
Asia-Pacific, particularly targeting small to medium-sized
corporate firms. Citigroup's global rival HSBC Holdings plc (
) is already treading with a similar strategy.
Companies like Citigroup and HSBC Holdings have thrived over the
last decade on IPO deals worth over $10 billion from Chinese
state-owned companies. However, the gradual decline in these high
value deals forced these companies to shift their focus on small to
medium-sized corporate clients.
According to a McKinsey & Co. report, banking revenues from
small and medium-sized companies in emerging markets is estimated
to grow 20% per year and may cross $350 billion by 2015, increasing
from $150 billion in 2010.
For 2013, Citigroup's revenues from commercial banking in the
Asia-Pacific region were approximately $1 billion while HSBC
Holdings recorded $4.4 billion as profits before tax from its
commercial banking business in the region. However, it should be
noted that businesses in commercial banking units of banks differ.
We believe that the latest move by Citigroup will pave the way for
revenue growth from its international exposure at a time when the
company is facing challenges owing to sluggish economic growth and
stringent regulatory landscape in the U.S. Also, we remain
encouraged as a number of restructuring initiatives by the company
are underway to strengthen top-line.
Citigroup currently carries a Zacks Rank #3 (Hold). Some other
better ranked stocks in the finance space include Capital One
Financial Corporation (
) and CU Bancorp (
). Both stocks sport a Zacks Rank #1 (Strong Buy).
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