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Citi to boost China staff, small business lending

(Reuters)
Updated: 2007-03-14 17:33

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Citigroup Inc. plans to increase its China headcount by one-third in 2007, as it opens new branches and boosts its small and medium-sized enterprise business, the top US bank said on Wednesday.

The bank will also launch Citigroup China Co. Ltd., its planned domestic subsidiary, for business very soon, senior Citigroup executives said, which would allow it to operate like a local bank and intensify competition in the world's fourth-largest economy.

The New York-based lender plans to add about 1,000 staff to its China operations this year, boosting its numbers to around 4,000, Citigroup China Chief Executive Richard Stanley told a briefing for a small group of reporters.

Some new hires are expected to work for Citigroup China's commercial banking unit, focusing on loan services for local small- and medium-sized enterprise (SME) clients, said Henry Zhang, a Citigroup director in charge of the business unit.

"Our SME business is more than double in 2006 versus 2005 and I believe we can maintain three-digit growth of the business this year and over the next few years," Zhang said.

"As you will get more clients, definitely you need more staff to serve your clients," said Zhang, who joined Citigroup as a management trainee in China in 1996.

Beijing has been aiming since the early 1990s to diversify its economy, boost innovation and create jobs by encouraging Chinese people to set up their own businesses.

The private-sector economy, dominated by local SMEs, accounts for at least half of China's national economy, which has maintained annual growth of 10 percent in the past few years.

"They are small but beautiful ... They lack market recognition now," said Zhang. "We can serve them better."

Next Deal: Brokerage?

Citigroup's Stanley said the SME business would be one of the bank's priorities for development in China this year.

It is also interested in the country's infant brokerage sector, which is highly regulated by the government.

"Right now, regulations don't allow foreigners to access the business but we are very, very eager to get involved," he said.

"We had many discussions with many parties," he said when asked if Citigroup had any plans to buy a local securities house.

Stanley said he had no idea when the Chinese government would lift its current suspension of approvals for foreign investors to buy local brokerages.

"I can tell you many Chinese companies approached us for potential partnership but we do not have any specific partnership yet," he said, without mentioning any names.

Citigroup has held talks with Chinese brokers, including mid-sized Huatai Securities and Xiangcai Securities, for possible investments, industry sources and local newspapers have said.

Last year, a Citigroup-led consortium bought control of Guangdong Development Bank (GDB) in a $3.1 billion deal, beating rival bidders including Societe Generale.

GDB is Citigroup's second significant banking purchase in China after it bought a nearly 5 percent share of Shanghai Pudong Development Bank for $72 million in January 2003.

Stanley said Citigroup aimed to increase its stake in Pudong Bank to nearly 20 percent late this year. The plan has already been under discussion, however, for more than one year.

Citigroup, one of the first foreign banks to do business in China more than a century ago, also plans to expand its client coverage to more Chinese cities after local incorporation, including the opening in April of a new branch in Hangzhou, near the country's financial hub in Shanghai, he said.



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