Cit­i­group plans ma­jor ex­pan­sion in China

The Pak Banker - - Front Page -

HONG KONG: Cit­i­group Inc aims to triple the size of its branch net­work on the Chi­nese main­land to about 100 out­lets within three years as the US bank vies with HSBC Hold­ings Plc for a big­ger slice of the main­land's bank­ing mar­ket.

"We are very ex­cited about China," said Stephen Bird, Cit­i­group's co-chief ex­ec­u­tive of­fi­cer for the Asia-Pa­cific re­gion. "For us, this is still the be­gin­ning of the China story."

Cit­i­group, the third-biggest US bank, trails London-based HSBC, which op­er­ates 105 out­lets in the world's sec­ond­largest econ­omy. The com­pany is draw­ing closer to sev­er­ing govern­ment ties as the US Trea­sury Depart­ment starts sell­ing its re­main­ing stake, the re­sult of a $45 bil­lion bailout in 2008. The bank, based in New York, cur­rently has 31 out­lets on the Chi­nese main­land. Bird said Cit­i­group will add out­lets in Chang­sha, Hu­nan prov­ince, and Nan­jing, Jiangsu prov­ince. Stan­dard Char­tered Plc has 61 out­lets. For­eign banks' op­er­a­tions in China are dwarfed by those of com­peti­tors like In­dus­trial and Com­mer­cial Bank of China Ltd (ICBC), the world's largest lender by mar­ket value.

Bei­jing-based ICBC has more than 16,000 out­lets in China and gen­er­ated 106.5 bil­lion yuan ($16 bil­lion) of pre­tax profit in the coun­try in the first half, al­most dou­ble the global to­tal for Cit­i­group.

"The com­bined mar­ket share of for­eign banks in China is less than 2 per­cent," said Vic­tor Wang, a Hong Kong­based an­a­lyst at Macquarie Cap­i­tal Se­cu­ri­ties Ltd. "They can't go into head-to-head com­pe­ti­tion with main­land len­ders."

Cit­i­group's ex­pan­sion in China is part of Chief Ex­ec­u­tive Of­fi­cer Vikram Pan­dit's bet on Asia, where economies have re­bounded faster from the global fi­nan­cial cri­sis than have the United States and Europe.

It gen­er­ated $1 bil­lion profit from the re­gion in the third quar­ter, al­most half the bank's to­tal net in­come.

Bird said China's govern­ment is tak­ing "pru­dent and sen­si­ble" mea­sures to cool the econ­omy. -PB News

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