The two companies will open in GongÆan and Chibi of Hubei province in central China where agricultural development is helping the region grow economically. They will respectively be known as Hubei Jingzhou GongÆan Citi Lending Co and Hubei XianÆning Chibi Citi Lending Co. Both lending companies are expected to start operation within months, Citi says.
Citi currently has 28 branches and sub-branches in China, in eight cities. It doesn't have branches in these towns in Hubei and so it is using this model to reach new customers, such as farmers or self-employed entrepreneurs who don't have much access to credit. The new lending companies will focus on offering secured and unsecured loans.
The bank says this marks the first time an international bank has received permission to establish the lending company model in China.
ôWe are delighted to be granted approval to launch our lending companies, which are an important new element of CitiÆs expanding operations and investments in China," says Andrew Au, CEO of Citi China, in a press release. "We understand the imperative to contribute to the further development of financial services in rural China, and we believe these lending companies represent a compelling business model that will support the accomplishment of this objective.ö