Citigroup said yesterday it plans to start equity brokerage businesses in Malaysia, Vietnam and Indonesia this year, and is seeking more branches in Thailand in a bid to expand its business in Southeast Asia.
The moves are a sign that the US bank, which has been hit by massive losses in the US due to the collapse of the housing market, is betting on Asia to boost its international business.
“Our current focus is to invest all across the region,” Piyush Gupta, who heads Southeast Asia and the Pacific region for Citigroup, said in an interview.
“We have been through two major downturns in this region, one in 1997 and then during the Sars (outbreak in 2003). We didn’t choose to scale back during these periods.”
Gupta said Citi was keen to add to its single branch in Bangkok and was in “active dialogue with the regulators” about expanding its operations in Thailand.
He said lending to Southeast Asia, Australia and New Zealand saw marginal growth in 2008 and may remain flat this year as trade-financing suffers from a downturn in exports and consumer demand.
“This year would be flat as well, it has grown in the first two months, but the growth is marginal.
“The reason we weren’t able to do as much trade finance was because exporters’ demand vanished. People didn’t want to borrow money because their export orders from the US and China were collapsing since September-October.”
But the slowdown in the two segments will be balanced by rising demand in Asia to refinance debt and loans, and corporate lending and underwriting share sales.
“We are doing more capital market activities now than we did anytime during the last several months,” Gupta said.
Citigroup was among underwriters for DBS’s US$2.60 billion (US$1 = RM3.70) rights issue and is advising Chartered Semiconductor’s on its US$300 million rights share sale.
But Gupta said the turmoil in global markets has badly hit the wealth management business after the collapse of Lehman Brothers in September. Fees and commissions from sale of wealth management products slumped 60-70% in the fourth quarter and stayed poor in the first quarter in the region, he said.
The US lender has received two federal bailouts, US$45 billion of capital from the Treasury Department’s Troubled Asset Relief Programme, and a government agreement to cap losses on US$300.8 billion of troubled assets.
Last month’s bailout would make the government Citigroup’s largest shareholder, with a potential 36% stake.