Package reassures customers in India

Package reassures customers in India

Mumbai: The US government bailout of Citigroup Inc. lifted the gloom at its Indian banking franchise, which assured customers that its business remained strong and pledged its renewed commitment to the country.

The bank’s local workforce had been gripped by insecurity since Sanjay Nayar announced his resignation as chief executive officer last week. He is to join private equity firm Kohlberg Kravis Roberts and Co.

The rescue package protected Citigroup from losses on bad assets and infused $20 billion (Rs1 trillion) of capital.

“Today’s announcement brings even greater clarity to our overall financial strength and ability to deliver the best service to our clients," Nayar, who will remain with the bank until January, said in a statement. “We hope it puts to rest the unfounded rumours on our financial position and brings the focus back to the fundamentals of our global franchise."

“Throughout these difficult markets, Citi India has maintained strong and stable operating income, unparalleled access to funding, extraordinary levels of liquidity and the best talent in the business. Our business is strong and our support for our clients has been unwavering. This announcement sends a strong signal to all our clients here in India about our continued commitment to serve them as we have been doing for more than 106 years," he said.

Immediately after Nayar’s resignation as Citibank NA’s South Asia franchise, the bank laid off 40 senior employees, according to a bank executive who did not want to be identified. Ajay Banga, the Asia-Pacific CEO of Citigroup, will be in India later this week to take stock of the situation and is expected to make some crucial announcements, this executive added.

Citigroup had recently announced that it would cut at least 52,000 jobs globally.

Nayar, in an interview with Mint last week, said the cuts would not have “much impact on India".

Mark Robinson, a Citi employee of 24 years who heads the bank’s Russia operations, will replace Nayar in India. His most difficult task will be recasting Citi’s non-banking consumer finance arm, which has been piling up non-performing assets as growth slows in what was once the world’s second fastest growing major economy.