Citigroup to Hire 100 Bankers in Asia, Targets Smaller Clients - Analyst Blog


In an effort to strengthen its commercial banking operations in the Asia-Pacific region, Citigroup Inc. ( C ) intends to hire around 100 bankers, according to a Reuters report. The company, which has presence in more than 100 countries, operates commercial banking business in 32 countries with around 4,000 employees.

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 ( HSBC ) 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.

Our Viewpoint

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 ( COF ) and CU Bancorp ( CUNB ). Both stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: C , CUNB , HSBC , COF

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