SHANGHAI, Oct 28: Citigroup Inc. is betting on the credit cards and wealth management business in China and shrugging off talk that rivals have taken the lead on the mainland with a string of big domestic investments.
Citigroup and HSBC Holdings Plc. are among the banking leaders in China, where the market opens fully to foreign competition at the end of 2006 and $1.65 trillion in personal savings is attracting the world’s largest lenders.
HSBC, Bank of America and Royal Bank of Scotland have spent billions of dollars buying stakes in some of China’s biggest lenders, while Citigroup, the world’s largest financial services firm, has not done a deal since January 2003.
But Richard Stanley, the group’s 45-year-old China chief executive, pointed to successes in the Chinese credit card business, securities underwriting and merger advisory as proof its strategy was working.
Those are the measures of success, and not necessarily how much capital you’ve invested, the 15-year Asian veteran told Reuters in an interview on Friday.
Citigroup is gearing up in credit cards and wealth management as Beijing will allow foreign banks to offer yuan-denominated services to local customers by the end of next year.
Wealth management will be a very attractive opportunity, Stanley told Reuters from the group’s soaring glass-and-steel tower fronting Shanghai’s historic Bund.
People will need to use private means to save for their retirement, he said, noting the reform of China’s state-backed welfare system.
There’s a big opportunity to help people to meet these objectives through wealth management products, savings products and investment products, he said.
I would put that as one of our highest priorities.
Citigroup, which has a market capitalisation of $236 billion, has a presence in six of China’s richest cities, including Shanghai, Beijing and Shenzhen, and it bought 4.62 per cent of Shanghai Pudong Development Bank in January 2003.
Citigroup plans to raise its stake in Pudong to the maximum allowable 19.9 per cent, but Stanley declined to comment on specific talks between the two groups. Citibank chairman William Rhodes has said it would come in a few months.
Stanley was also coy on the prospect of another bank investment for Citigroup.
We’re very focused on our organic platform, he said, adding that Citigroup is always open for opportunities in the future.
Citigroup and Singapore’s DBS Holdings are bidding for part of struggling Guangdong Development Bank, sources say.
Citigroup established a co-branded credit card with Pudong Bank in February 2004, giving it a big lead over competitors like Deutsche Bank and Bank of America, which have only just begun to work with local partners in that area.
Citigroup is slowly beginning to get a better picture of the risk profiles of Chinese consumers in a nation of 1.3 billion people as it prepares to offer more retail products.
We will test the market in certain areas and depending on how that goes, accelerate the penetration, Stanley said.—Reuters
