Citigroup's ASEAN CIB business rears new Asian Tigers

Catherine Weir says a new commodities business in Singapore and a securities services business in Vietnam point to the bank's aggressive ASEAN strategy.
As the IMF meetings finished up in Singapore last week, FinanceAsia sat down with Citigroup's CCO for Singapore and ASEAN Corporate and Investment Banking head, Catherine Weir, to discuss what the bank is focusing on in the ASEAN CIB space and where it sees future growth coming from.

Is Singapore an important country for Citigroup?

Singapore is one of Citigroup's major centres in the region. It's a hub for our global consumer business in Asia and our Asia/Middle East Global Wealth Management business is based in Singapore. So, yes Singapore is a very important country for Citigroup. We have over 8000 employees in Singapore alone and have been here for more than a 104 years. The IMF made a wise choice in picking Singapore for last week's IMF meeting.

How important is the ASEAN region to Citigroup's future growth in Asia-Pacific when you consider there are markets like China and India in this region?

ASEAN as a block holds huge potential opportunities. The ASEAN region has a combined GDP of almost $700 billion and a population of 540 million. Within the markets which comprise ASEAN, we have well-established Citigroup businesses on the ground, involved in every spectrum of corporate and investment banking as well as retail and private banking. We expect this region to be a strong contributor to our future growth in Asia.

If we could turn to the corporate and investment banking side, you run this business in the ASEAN region. What are the key markets for Citigroup's franchise in the ASEAN region?

As I've mentioned, Citigroup has a strong footprint throughout Southeast Asia and we were honoured to be voted by FinanceAsia as the best foreign bank in the Philippines, Singapore and Thailand in the 2006 awards.

We have been in countries like the Philippines and Singapore, for more than 100 years, and have well-established franchises. We also have well developed franchises businesses in countries such as Brunei, Indonesia, Malaysia and Thailand, where we have been for several decades. This history has allowed Citigroup to build up a set of strong corporate relationships and the key is leveraging of these local relationships to provide capital markets and investment banking services to our clients as they internationalise and seek new markets.

The Citigroup platform means we can offer local solutions or/and international solutions, that's the advantage in having a global presence. We are a leading debt underwriter in Singapore local bonds for example, a leader in ABS deals in Thai baht and a regular underwriter of Malaysian Islamic bonds. But we can be global when our clients need that, such as leading bonds offshore for the Republic of the Philippines, offering offshore equity financing solutions to ASEAN based companies or advising on cross border M&A.

I think this a key differentiator for Citigroup - we have very global access with local knowledge and insights in 100 countries: no where truer than in Asia.

But we are not complacent. We continue to invest in key people to develop and grow the franchise in most countries including making recent hires such as Zafrul Aziz, head of investment banking for Malaysia, Ignasius Johan as head of investment banking for Indonesia and Rafe Haneef, head of Islamic investment banking for Asia.

We are launching new products too, such as the expansion of our commodities business in Singapore and the launch of securities services in Vietnam. The ASEAN region is full of growth opportunities and we are very excited about the development of our newest franchise in Vietnam.

Citigroup recently signed a cooperation agreement with Vietnam's Eastern Asia Commercial Bank to look at opportunities to work together in develop corporate and retail banking products for the local market. The first step is an agreement to link our card networks, giving EAB's card customers access to our international cash-machine network. The agreement also includes Citi providing training to EAB staff in a broad range of areas including risk management, cash management, trade finance and consumer finance and expansion of solutions to the SME marketplace.

Vietnam is an important market to Citigroup. It has an economy expanding at the rate of 8 percent a year. It's been estimated that only an estimated 5 percent of the nation's 84 million people use banking services, leaving room for growth in the financial industry to accelerate.

Can you give an overview of the individual businesses that Citigroup's ASEAN CIB is focusing on and where you expect to see big growth opportunities?

We have over 3,000 CIB employees in the ASEAN region and there are exciting opportunities in all of the seven ASEAN countries that Citigroup operates in.

I outlined the opportunities in some of the new tigers of Asia such as Vietnam but even established markets offer chances to grow the franchise. Singapore is the most developed of the ASEAN-based economies and has a very large mature domestic market but we are focusing on building up the small to medium enterprise (SME) and the middle market enterprises (MME).

In markets such as Indonesia and Thailand we are focusing on building a domestic equity platform to offer our international investor clients increased opportunities to invest in some of these markets as well as increased sources of capital to growing domestic clients.

In Malaysia we are developing our Islamic banking business and offering solutions to meet clients' needs in one of the world's fastest growing asset classes as global flows trend to Asia.

In the Philippines, we have a strong debt franchise in the country and are one of the leading underwriters for the sovereign's international bond transactions.

In Vietnam we now have over some 200 people on the ground with an aim at growing our franchise as more Vietnamese companies look to tap access the international capital markets. Our businesses in Vietnam now includes global transaction services, sales and trading platforms, and public debt and equity solutions. Vietnam is one of our fastest growing markets with a doubling of revenues in the last three years.

What key themes do you see developing in the coming years in the ASEAN CIB space?

Asia's local bond markets have come a long way in a short time since the Asian financial crisis underlined the need for alternative financing avenues. The next step is the increased liberalisation in some of the ASEAN bond markets to allow more international money managers to invest in them and more international issuers to issue in them. It is a relatively untapped resource for the growth of not only the respective economies but also infrastructure financing funding.

We are very committed to the development of the local currency bond markets, as we have a leading position in Singapore, and a commanding position in Malaysia, Thailand and the Philippines. Now we are looking to replicate that success in the new markets that we are bringing on line.

Additionally, I think if the clients evolve as we expect them to, they are going to increasingly require more complex solutions to help them develop their markets and manage their risks. So our structured solutions business will become progressively more important, and I think we are well positioned with our commodity/fixed income credit based business as well as our sales and trading capabilities.

There are also increasing flows from the Middle East into Asia due to the rise in the oil price. A lot of this money is being channeled into Asia and given the cultural and religious links, some of this money - including Islamic money - is looking for seeking new investment opportunities in countries such as Malaysia and Indonesia and, of course, Singapore.

The growth in the hedge fund and prime brokerage business in Asia is also presenting interesting opportunities for the ASEAN franchise.

On the product side, REITs in Malaysia, infrastructure financing needs in Thailand and Islamic bond development in Malaysia are also offering plenty of potential for growth. In reality, every country in the ASEAN region is full of opportunities.
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