Mumbai: The restructuring of Citi into two separate businesses will not have any major impact on the bank’s 107-year-old operations in India, according to Sanjay Nayar, the outgoing chief executive of Citibank’s South Asia franchise. “It’s too early to comment on the India impact, but my take is the recast is being done primarily keeping in mind the bank’s US and Europe operations,” Nayar told Mint.
With at least 8,000 employees and $3.1 billion ( nearly Rs15,130 crore) in capital, Citi in India caters to around 1,500 large companies, 2,500 small and medium enterprises, and seven million customers.
Net profit for the Citigroup in India grew to Rs2,596 crore for the period ended 31 March 2008, a 65% jump from Rs1,575 crore in the year-ago period. The group’s balance sheet grew to Rs1.08 trillion during the period, up 28% from Rs84,395 crore in the previous year.
In India, the bank offers market, corporate and investment banking services under the Citi brand name and consumer products and services under the Citibank and CitiFinancial banner. It also runs equity brokerage, private banking, wealth management, and private equity (PE) businesses.
According to Nayar, most of the businesses will come under the Citicorp. fold while the consumer finance business will be under Citi Holdings.
In India, the consumer finance arm of the bank, CitiFinancial, witnessed a significant decline in its profit for the nine months ended 31 December 2007. The decline has been largely due to higher delinquencies in the unsecured personal loan segment. More recent details on its financials are not available in the public domain.
In March 2008, Nayar had told Mint that “irrational lending, loose underwriting norms and ample liquidity” in the market led to problems for the consumer finance arm, which has been growing aggressively since 2000 following Citi’s global acquisition of Associates First Capital Corp. in the US.
CitiFinancial began its Indian operations in October 1997. It is engaged in retail financing, primarily to finance the mortgage segments and the lower income segment of retail borrowers for personal, consumer durables, and two-wheeler loans.
Nayar, in an interview to Mint on 21 November, had said that the consumer finance arm (CitiFinancial), which is in a transition phase, should be fine by June 2009. He had further added, “In the past one year, we have let go of about 400 people, which is reasonable. By the middle of next year, the consumer finance arm will be in order and it will become a multi-product engine serving the middle class of India.’’
“However, I would like to clarify that we will not pull out of any business in India. We are entering 2009 on comfortable liquidity and capital,’’ Nayar had said.
Nayar is set to leave the bank to join US-based PE firm Kohlberg Kravis Roberts and Co., as CEO and country head (India) in February. Mark Robinson, a 24-year Citi veteran, is the bank’s next CEO in India.