Citigroup remains the best emerging-markets bank. Its coverage, product range, distribution platform and franchise leave competitors trailing in its wake. And it continues to expand, offering ever more products from an ever-growing network of branches. From Latin America through to Central and Eastern Europe, Africa, onto the Middle East and across into Asia, Citibank’s presence is long established. Unfortunately for its competitors, it’s only going to get tougher to catch it, let alone compete with it. By bringing Salomon Smith Barney and its investment banking expertise on board it really is becoming the one-stop shop. And perhaps even more worrying for its rivals, Citibankers say that the machine is still cruising along on only eight of a possible 12 cylinders.
In a year that presented so many challenges to those that dare to enter such volatile and unpredictable markets, Citigroup increased its earnings by 16%. And the 19% that the emerging-markets operation added to the bottom line was far beyond the rounding error that many other banks’ operations in emerging markets manage to contribute.
Citigroup’s résumé of achievements in the past 12 months makes impressive reading. In Latin America it was top in M&A, equity and fixed income. Profits soared 72% to an impressive $1.01 billion.
Accomplishments in M&A cut across many sectors and countries. It advised on Cemex’s acquisition of Southdown – the largest ever take-over by a Latin American company; BBVA’s acquisition of Grupo Financiero Bancomer in Mexico; and Zip.net’s sale to PT Multimedia.
Its Mexican operation was a chink in its formidable armoury – until May. On May 7 it declared that it would be buying Banacci, owner of Banamex, the biggest and best banking operation in Mexico, for $12.5 billion. At a stroke Citigroup became the leading player in the Mexican market and with it potentially boosted its capabilities throughout the region.
In central Europe, Citibank employed the same tactics as in Mexico. After taking over Bank Handlowy w Warszawie, Citigroup is now the largest corporate bank in Poland. In Hungary too it is bulking up. It now has 17 branches there. The Czech Republic is experiencing its first taste of Citibank’s retail offerings alongside its already dominant treasury operation. As well as getting bigger it also proved itself to be innovative. In Slovakia it arranged the first Islamic financing deal for a Slovak oil company, Slovnaft. And on the M&A side it was an adviser on the $4.2 billion acquisition of a strategic stake in Telekommunikacia Polska by France Telecom.
Africa, the toughest of all the markets, is also a major part in the workings of Citigroup. It can rightfully claim to be the only pan-African bank. It has branches in 17 countries and services available to customers in another 11. Although others, like Standard Chartered and Barclays, have larger operations in some countries, especially on the retail side, they operate in far fewer states. And as others question their commitment, Citibank continues to look at further possibilities to expand into new and ever more challenging countries.
The list goes on. In Asia, one of the most competitive regions for the crown of being the best regional bank, it again pulls no punches and is successfully challenging and beating HSBC in many areas that its rival once could have comfortably called its own. In the local currency debt markets it arranged deals in eight of the nine major markets. Its nearest competitor could only manage six. In debt overall it appears above, or in some cases just below some major domestic banks. In dollar-denominated debt it is constantly in the top three. In yen it is number two, just behind the formidable Nomura. And in Singapore dollars it is vying for top spot with DBS Bank. However in debt overall, syndicated loans and bond issuance combined, it toppled the giant Singaporean bank. Deals included Singapore’s longest tenor issue with Land Transport Authority’s $500 million 15-year deal; and the largest corporate issue to come out of Singapore with Singapore Telecommunication’s S$1 billion five-year bond.
Citigroup also proved its commitment to the Middle Eastern and north African markets. In Egypt it has a 20% stake in investment bank EFG Hermes and in Saudi Arabia, its involvement with Saudi American Bank is beginning to bear fruit.
