Mumbai: Citigroup Inc., the largest US bank by assets that has posted $55 billion (Rs2.38 trillion) in losses and write-downs in 2008 and cut some 14,000 jobs worldwide, announced a reorganization of its Asia-Pacific business on Monday led by Ajay Banga, CEO of Citigroup in Asia-Pacific region.
In a telephone interview with Mint from Hong Kong, Banga says he is working on a strategic vision for the bank’s Asian business for the next four-five years with India playing a vital role there. He is being helped in this by Sanjay Nayar, who heads the bank’s South-East Asia business, including Bangladesh, Sri Lanka and India.
Banga’s real mission seems to be to create one Citi. “In front of a client, the entire Citigroup should be presented with full force,” he says.
In India, Banga says he sees a lot more “collaborative partnerships among various businesses” of Citi such as between private banking and SMEs (small and medium enterprises); SMEs and consumer banking; corporate and wealth management.
The reorganization comes as Citi again appears close to selling its business process outsourcing arm Citigroup Global Services, with Tata Consultancy Services Ltd emerging as the front-runner. If all goes well, a deal is likely to be inked in the next two weeks. While neither Nayar nor Banga would discuss this impending transaction, both of them ruled out the possibility of selling Citi’s 11.81% stake in Indian mortgage major, Housing Development Finance Corp. Ltd or HDFC.
In his interview, Banga explained the rationale behind the Asian restructuring and discussed India’s growing importance for the bank. Edited excerpts:
What does this reorganization mean?
Our previous structure was based on three businesses: corporate and institutional clients group, consumer business and wealth management. India was one of the first countries where we introduced a CEO-driven business model in 2007. Sanjay (Nayar), who was earlier heading corporate and investment banking of the bank in India, was made the CEO and that has worked well. To that extent, India was a precursor of this new business model.
Does this signify a migration from matrix system to a CEO-driven model?
No, there is no migration as such and there will be product heads responsible for delivering global product standards. We are, in fact, putting all businesses together under one head in four regions of Asia and marrying it with best of product capabilities. This works much better, as we have seen in India.
Citigroup Asia-Pacific region CEO Ajay Banga.
What is the basic philosophy behind this?
We are working on four principles.
It is not products versus geographies. The objective is to present the complete capabilities of Citi to our customers. Very few companies across the world have our range of products. We will see now a lot more collaborative partnership among various businesses—private banking, SME, consumer and corporate banking, cards, and wealth management. The objective is to create one Citi.
Secondly, we are cutting unnecessary layers. The four region heads and seven product heads will directly report to me. Earlier, the country heads, such as Sanjay, were reporting to me through either the consumer banking head, based in Singapore, or institutional banking head, based in Hong Kong.
Thirdly, it will provide more opportunities for our people to grow. Sanjay, Piyush (Gupta, in charge of Southeast Asia Pacific,) Stephen Bird (in charge of North Asia) and Doug Peterson (in Japan) are prime examples. Once you oversee all businesses, you become a more complete manager, and prepare yourself for bigger responsibilities in a universal bank like Citi.
Finally, we want to take advantage of our global franchise and products are delivered locally.
So it’s localizing a global bank?
We are already a very local bank in most markets we operate in. This structure allows us to deliver global products in local markets by empowering people in Asia, where our clients are. We are using local expertise but not losing our global heritage. That is our great strength.
Where does India stand in your Asian business model?
India is a very critical growth market for Citi. We have been retaining profits locally and investing in India. We have also moved capital to India when necessary, which symbolizes our desire to grow. It is a destination for both investment and a source of talented managers. About 350 of our global managers who work around the world, started their careers in India, which underlines how important the market has been as a source of talent.
There are many reasons why India is an attractive market. The growth of the middle class, increasing wealth of people, healthy and growing corporations and the government’s increasing focus on infrastructure are some of them and they all fit our product and franchise capability. We have faith in India’s growth.
You are working on a larger Asia plan?
Yes and we are also working on refining our strategic vision for India.
What about selling your stake in HDFC?
We have no intention to do that. HDFC is an outstanding institution and we have no plan whatsoever to divest our stake. It has been a great investment for our shareholders.
(The Economic Times reported Tata Consultancy’s front-runner status for buying Citigroup Global Services on 19 August.)