CITI FINDS ITS SWEET SPOT
Asia Pacific CEO Francisco Aristeguieta is confident the US-based bank has found the right mix of countries and customer segments to ensure success.
There is a beautiful diversity in Asia Pacific that is striking for Francisco Aristeguieta, who has been heading Citi’s Asia-Pacific operations just a few months shy of two years. After spending much of his two-decade banking career overseeing Latin American markets, the Venezuelan is now watching over Citi’s largest market outside of the United States.
In this part of the world, wealth is being built at a rapid clip, countries are driven to grow, and flows across the region can have a healthy multiplier effect in bolstering intra-Asian trade.
“Here, you have a little bit of everything. And you travel two, three hours, and you move from a monarchy, to a single-party-system country, to a democracy,” says Mr Aristeguieta, who cuts a tall and sharp presence in a meeting room in Singapore.
“We also have a unique situation, which is we have one country, that is oversized, within the region, and that, I think, is fairly unique to Asia. Where you have China, which is such an important element around trade, and around geopolitics for the region, it’s something you have to work with, if you want to succeed in Asia. China has generated a tremendous amount of benefit to many of these countries by opening its market.”
All this contrasts with his background in Latin America, which tends to be more homogeneous, and “very Catholic”.
“I think that makes our opportunity bigger, and at the same time, more challenging,” says Mr Aristeguieta, who is now based in Hong Kong, of the territory under his watch. “It’s extremely rewarding to operate in that environment that is demanding but at the same time you can find the right target market and the ability to serve the same profile of clients effectively.”
Through piercing eyes, Mr Aristeguieta oversees a region that is driven to grow. Just as well then, that Citi Asia Pacific for the fourth quarter of 2016 recorded revenue of US$3.2 billion, up 4% from a year ago. Pre-tax income rose 18% to $1.2 billion. For the full year, the operations from this part of the world made $13.2 billion in revenue, with net income at $3.3 billion.
“As I talk to different leaders and governments throughout Asia, there is a profound commitment to growth that I think is extraordinary given there are different political systems and histories. But when you sit down and assess, it comes through very strongly. It doesn’t matter who you talk to across Asia — it’s all about growth. I think it’s a very powerful approach to leadership that is refreshing,” he says.
Last year was a pivotal one for Citi Asia Pacific, as the bank adjusted its strategy to draw more strength from its global network. That has meant cranking up the engines to standardise offerings across institutional and consumer units, and tightening the relationship between various units in the bank. In short, getting more bang for the buck.
“It was a very, very important year. It was a year in which we made important changes to our strategy, and the way we allocated capital to that strategy,” Mr Aristeguieta says.
“As a management team we were extremely focused on building growth. We were able to move our platform to a position where we prioritised businesses, client segments, as well as products and services, to ensure that in alignment with our global strategy, we are able to generate top-line growth, and higher returns for our shareholders.”
Citi has refocused its corporate bank to better connect its global network for Asian clients and capture a greater share of intra-Asia flows in its regional markets. This has meant going deeper and wider with its target client segments, including most of the Fortune 500 companies, and increasing the connectivity between the corporate and investment banking, trade and treasury services, as well as the markets business. Today, Citi operates institutional and corporate businesses in 16 markets in Asia Pacific.
“None of those 16 countries, individually, represents more than 12% of our earnings, which makes our platform a truly regional platform. That allows
None of those 16 countries, individually, represents more than 12% of our earnings, which makes our platform a truly regional platform. That allows us, as a management team, to focus broadly on the region, and to truly serve those capital flows, and clients’ interests, that are regional”
us, as a management team, to focus broadly on the region, and to truly serve those capital flows, and clients’ interests, that are regional,” says Mr Aristeguieta.
“That brings our management team a different perspective on what is success. Success for us is the network. Not only Asia, but certainly, globally. I think Citi is privileged to have that vantage point that I think is extremely relevant today, and will become more so in the future.
“I think the fact that our network is uniquely built, from the ground up, starting from a local banking licence that in Singapore, and in markets like China and India too, has been in place for over a hundred years. And around that local banking licence, like here in Singapore, we’ve built an extraordinary talent pool that knows the local market extremely well and that is then connected regionally and globally through our network.”
COMMON MARKETS
The tighter focus on capturing Asian flows also comes as the region is expected to forge stronger ties in time. “Asia needs to come closer together and I think it will continue to come closer together, inevitably. You see it in Asean and you see the connection between many countries and China,” he says.
“It is common markets that will drive many decisions around trade. I think the opportunity to find common ground on regulation will also drive a disproportionate, or faster, movement of capital, within the trade regions. So to the extent that common ground is found and leveraged, I think that will ease the way around capital movement.”
Citi has invested in digitising both the corporate and consumer business, as its clients are increasingly looking to operate more efficiently. It has launched its mobile application for corporate treasurers and chief financial officers to make corporate transactions on the go. In Asia, the value of mobile transactions last year for Citi was $425 billion, with India alone registering more than $130 billion.
Citi also launched a “soft token” service in several markets in Asia, including Singapore, to allow its treasury and trade services clients to log into mobile devices without any network connectivity — removing issues with unstable internet connections, and security concerns over one-time token passwords sent through SMS.
In the consumer business, Citi has gone deeper in digital pursuits, while cutting down on branch presence. Clients in China can now register with Citi on WeChat and receive alerts, offers and access account balances and transaction history without leaving the WeChat app, says Mr Aristeguieta. Around 75% of the bank’s credit cards in China are now paid through Alipay.
The bank has also formed a partnership with the regional ride-hiring operator Grab, integrating its services with well-known mobile applications to increase growth in Citi’s card business. It has launched similar partnerships with Lazada, Airbnb and AirAsia.
“On the consumer side of things, what we’ve done is to narrow down our deployment globally to where we have scale,” says Mr Aristeguieta.
The bank has also sharpened its “emerging affluent” focus, targeting clients who are able to hold more deposits with the global bank, and have a growing wealth base upon which Citi can build its consumer services.
Banks in Asia such as Citi are clear that their growing wealth businesses are intrinsically tied to helping regional magnates transform their businesses into global empires. And so the wealth business, which handles about $210 billion in assets under management in this region, will also work more closely with the corporate division, tapping the burgeoning wealth of rising entrepreneurs based in this region.
“Since the global financial crisis, Citi has gone through a profound reassessment. And today, I feel we are truly in the sweet spot of our target market. In terms of institutional clients or consumer clients, [we are] prioritising those that truly value the global brand or network,” says Mr Aristeguieta. That has meant standardising the way these markets are operated, and in a way that, according to him, is an alignment not seen in the more than two decades that he has been with the bank.
Mr Aristeguieta has also introduced an internal tool to help Citi bankers manage their careers through the bank. “The first thing graduates do is they delegate their future to a stranger that they’ve just met — a supervisor, or even worse, on an entity. They do this, under the belief that if they work very hard, they are going to get their dream job,” he says.
“We are prone to delegate our career to supervisors or the entities that own them. And that, unfortunately, over time, puts us in a position where we lose people we don’t want to lose. You think you’re entitled to a certain role, but perception wasn’t there for you to get into that role. Or the selection process wasn’t transparent, and you got frustrated.”
KEEPING TALENT
Indeed, Citi is well known for producing several CEOs at other banks. Mr Aristeguieta is keen to keep the talent. “I’m very, very proud of our alumni, and every country I go to, we have very, very significant success stories around Citi alumni who have been extremely successful after leaving Citi. It’s truly a reflection of how well we hire.
“The phone will ring, and the market calls our talent. What I want ultimately is that our talent, because of these tools, they know what they are worth. And knowing what they are worth is not only how much the market pays for a certain role, it’s how much they would leave behind. We forget we have a reputation that we have built in the place that we worked at for many years.”
Through the internal portal, staff can track their career progress, and be notified electronically when a position that they are interested in opens up within the bank.
“You don’t have to go to the water cooler to understand what positions are available — the system will tell you,” says Mr Aristeguieta.
“We brought a lot of transparency to the selection process, the promotion process, where we brought in a mandatory slate of interviewers to positions. We’re making sure that when we select for the job, it’s by a group of people who don’t have a bias toward the person who sits in the chair. It generates a positive network, because if I interview you for a job that you don’t get, but I see in you something that I didn’t know? That opens the door to other things.”
This goes beyond just developing staff, but also means better hiring decisions, and better managers down the line.
“In my experience, many people in leadership positions fail because there is a disconnect between the way you think you are perceived, and the way you are perceived. Calibrating that perception becomes very powerful, and to the extent that you truly know where you stand, you are a better manager, and you are a better worker for it,” says Mr Aristeguieta.
“The result has been that when you go through this process, you end up being a better manager, because you’re eager to move to your next job. You’re not holding on to your current chair. You’re not afraid to be replaced so you hire better.