Alone On Top

It’s Citi, the insomniac bank again! A year ago when we introduced a category for foreign banks in our survey given the niche positions they occupy and the peculiarities of their segment — can’t grow as well as banks in the segment aspire to given the regulations — we hoped to see some intense competition. The truth is, we have been disappointed: Citi has won hands down, again! It’s the Best Foreign Bank in the BW Businessworld Best Banks Survey 2014-15.

Fiscal 2014-15 saw foreign banks up their game compared to the preceding year, but it’s a poor benchmark to go by with anyway. Very few grew; and that’s why there was no award for the Fastest Growing Foreign Bank just as last year. Many of them are in a “pause mode”; however, from their point of view, it’s sensible too. It’s not a time to chase market share and fly into an air-pocket as you go about it. Now given that a few of Citi’s rivals are bogged down in a big way by dud-loans (or have got enmeshed in the regulatory) and the better dividend by way of economic growth ahead, it’s got every reason to be upbeat on its opportunities.

Says India CEO Pramit Jhaveri: “With GDP growth forecast at approximately 7.7 per cent for 2016, India remains in a favourable position compared to almost the entire world. We are undoubtedly going through a gradual recovery phase and this has been helped by structural reforms, government expenditure and urban consumption spending, among other things.” But he cautions: “India is now well integrated into the world economy and cannot remain immune or unaffected by external headwinds caused by the very uncertain and volatile global environment.”

The “headwinds” aspect is captured well in Mint Road’s annual survey on International Trade in Banking Services (ITBS; 2014-15). The business of both Indian banks’ overseas branches as well as foreign banks in India grew at a slower pace. In 2014-15, their consolidated balance sheet increased by 13.5 per cent and 2.8 per cent (compared to 28.7 per cent and 20.3 per cent in 2013-14). Likewise, the consolidated balance sheet of overseas subsidiaries of Indian banks also grew slower at 1.8 per cent (23.9 per cent). In good times, it’s a different story. Since March 2010, these figures grew by 160 per cent (in dollar terms) and 25 per cent. If foreign banks fare poorly in comparison, it’s because they are not into the balance sheet game in the first place.

What are the growth opportunities for Citi given the state the world will be in for sometime to come? “It’s very much business as usual for us in India. Our success will be a consequence of the quality of our execution around our chosen client segments and our platform and network,” says Jhaveri.

As a global bank that’s present in over 100 countries across the world, Citi wants to act as a bridge between India and the rest of the world. “This is true for trade flows, investment flows, capital flows and foreign direct investments (FDI); both inbound and outbound,” he adds. A big bet is non-resident Indians (NRI). “As opportunities to invest shrink in the rest of the world, we will continue to work with our NRI clients to invest a larger share of their investible surpluses in India,” points out Jhaveri.

It’s safe to assume that since the state-run banks are in a spot of bother due to capital and dud loan concerns, well-placed foreign banks are in a sweet spot. After the global financial crisis, a number of banks and institutions have restructured and reorganised themselves. “Today Citi is a leaner, simpler and safer institution… However, there’s a fresh wave of restructuring that you may have noticed a number of institutions are currently carrying out. This will presumably have some bearing on the ability of such banks to serve clients in markets like India,” says Jhaveri. There are other factors that will play out for the industry — high levels of dud loans, proliferation of digital technologies, increased competition from new entrants including unconventional players and financial inclusion.

India is a supplier of talent to Citi’s global franchise. It has global centres across five locations — Chennai, Bengaluru, Pune, Mumbai and Gurgaon — that focus on technology, analytics and financial processes, among others, for Citi and its clients’ needs across the world. Two years ago, the bank launched the ‘Citi Campus Innovation Challenge’ — last fiscal, the theme was ‘Innovative solutions to digitise payments in India’. It received 147 team entries and shortlisted six teams. The finalists were evaluated for Citi’s Management Associate (MA) Programme, a two-year leadership developmental programme that gives MAs the opportunity to work across different business lines and functions as well as go for overseas training. Three students will join the programme in June this year.

“The aim is to encourage and help mentor young talent across meritocratic institutions. We see this as an extension of our engagement with talent. Citi is relatively a young institution with a significant percentage of our employees being millennials or Gen Y, so we believe it is extremely important to constantly help young talent push boundaries,” explains Jhaveri.

For Citi, tomorrow never dies!

raghu@businessworld.in; @tabonyou

(This story was published in BW | Businessworld Issue Dated 08-02-2016)