Citigroup, which posted nearly $9 billion of revenue and $2.8 billion of net income from Asia ex-Japan in 2004, believes acquisitions will prove pivotal as it expands, said Robert Morse, chief executive of Asia Pacific corporate and investment banking.
An exception will be India, which has yielded average revenue growth of 25 percent over the past halfdecade and where Citigroup is foreseeing $1 billion in revenue this year, Morse told Reuters. Indian regulators had put a hold on foreign purchases of local banks till 2009.
"That’s certainly one of the fundamental growth opportunities that we have in Asia in general — to look at acquisitions as a way to extend our franchise," Morse said in an interview on the sidelines of the Asia-Pacific Economic Cooperation summit.
"If we could achieve 20 percent growth, we would be very proud," the executive said in the southern Korean port city of Pusan.
Among other things, Citigroup is trying to expand a relatively tiny footprint in China, the world’s seventh largest economy which hoards $1.7 trillion in personal savings.
Global financial services firms have poured over $16 billion into the country’s banks, hoping to stake out a spot in an industry Beijing considers a weak economic link and is anxious to shore up ahead of wider liberalisation in 2007.
Citigroup plans to quadruple its 4.62 percent stake in Shanghai Pudong Development Bank , which it bought for $72 million in 2003.
But it has not made the kind of investment splash that many had expected from a company worth over $200 billion, while rivals HSBC Holdings Plc. , Royal Bank of Scotland and Bank of America Corp. have invested billions of dollars in major state-run lenders.
Now, Citigroup’s targets include Guangdong Development Bank, the secondlargest lender in the affluent southern province, and mid-sized brokerage Xiangcai Securities, sources say.
Morse would not comment on the US financial giant’s interest in those companies.
"I would argue that if someone with those commitments and capabilities were to acquire Guangdong Development Bank, or a meaningful interest in GDB, that that would be so much more positive than a simple financial transaction," he said.
Citigroup also wants to establish a Chinese presence in domestic investment banking. Morse would not confirm if Xiangcai was a target. Industry sources say HSBC and Credit Suisse Group’s CSFB are also bidding for the broker.
Beijing’s accelerating efforts to overhaul and expand its $250 billion stock and debt markets promised a potentially vast market in the long term, Morse said.
