Citi slickers seek to polish Asian profile

Restoring Citi’s brand to its former glory will be a far from easy job for Money K, so named by his image-conscious father, who had huge ambitions for his son to become a major player in the financial services world. Mr K’s own brand is already in the ascendancy, having risen to the position of global head of marketing at Citi Private Bank. Now the charismatic, Singapore-based operator faces the more daunting task of polishing up the fading star of Citi’s Asian dream. What was once the world’s largest bank is now considered a typical example of an institution that regulators just see as “too big to be allowed to fail.” After last year’s huge bailout – which saw the US government handing Citigroup $45bn under the Troubled Assets Relief Program and backing around $300bn in soured assets that sit on the firm’s books – the strategy pursued by Citi CEO Vikram Pandit, announced earlier this year, has been to restructure the firm into two separate operating units, Citicorp and Citi Holdings, in order to maximise the value of the core franchise. The first unit, Citicorp, consists of operations viewed as central to the bank’s future, including private banking, consumer banking, investment banking and transaction services. The second unit, Citi Holdings, contains non-core businesses, many of which Citigroup has already offloaded or divided. “Citi Private Bank will always be a core proposition of Citi to institutions and individuals globally,” states Mr K. “There are a lot of synergies between the private bank and the investment bank, as our top institutional clients are all wealthy individuals, who are often clients of the private bank as well. As an institution, we can look after their personal as well as their professional wealth.” Regaining trust He acknowledges there is much work to do to regain clients’ trust. “There is no denying that during the crisis our brand and reputation has been dented and clients’ confidence has ebbed a bit. The profits made in the past two quarters have been ‘refreshing’ to clients but we will still have to continue making profits for a few more quarters to regain the respect and perception that we used to have before the crisis,” he explains. The key message that needs to be reiterated to clients is that Citi is financially strong, believes Mr K. “We are now supported by the government and we are taking many steps of our own to restore our capital strength and rebuild the franchise,” he says. “We also continue to innovate and bring the best ideas, best practices and solutions to our clients, for a new era of wealth management.” Citi Private Bank established its operations more than 100 years ago in Asia, which accounts for almost a third of the private bank’s revenue. The newly appointed global head of investments, Shantanu Rastogi, following its chairman’s footsteps – Deepak Sharma was appointed chairman in April 2009, based in Singapore – will also be based in Singapore, a sign of the country’s appeal as a global hub for the wealth management business and the firm’s sustained commitment to the region. As is the case with most global private banks in Asia, Citi Private Bank’s two booking centres are in Hong Kong and Singapore, which together with Taiwan, Indonesia and Philippines are its top five markets in terms of revenue source. But India and China, which have some of the highest grown rates of new millionaires every year, account for just 1 per cent of Citi Private Bank’s revenue globally, admits Mr K. “The two countries are still underrepresented, because they are still very closed and inaccessible to true private banking services. Before we can really rally into those markets, there needs to be a greater liberalisation of the financial services sector and individuals need to understand the value that a private bank can add to them,” he says, adding that nevertheless Citi’s consumer and retail banking’s market share is increasing fast. End of the fun times Retaining and acquiring new clients and advisers, a key goal for any private bank, is Citi’s key ambition. “The bulk of my marketing budget goes towards client interaction and experiences,” says Mr K, and this translates into events which focus on investment and wealth management topics. “The ‘fun’ or ‘non-investment’ or ‘non- intellectual’ related events have been put on hold or postponed indefinitely.” Clients are invited to bring their friends, families or business partners and that often leads to new client acquisition. “Private banking clients need to be persuaded on an intellectual level, they are not persuaded by a promotional kind of activity. A lot of new clients come through referrals, as no millionaire or billionaire in this world is going to look at an advertisement and decide to put his money with the bank,” states Mr K. “Client acquisition is a leading indicator of our business, whereas revenue is a lagging indicator,” emphasises Akbar Shah, regional head for Singapore, Malaysia and Brunei and head of mega wealth for Asia Pacific. Mr Shah mainly relies on the bank’s global network and referrals to attract new clients. “The best relationships are those where the client feels or understands that the bank is actually trying to understand what they want, and this is crucial from a risk perspective. “Suitability is very important, but there is no magic suitability. That means having discussions with clients to understand what they want, to find out their risk appetite, their time horizons and what sort of products they are used to and what sort of products they want to learn about. These discussions are tailored to each client,” he says. Citi has a team approach and generally, although not early on in the first meeting but “when things start heating up,” private bankers meet the client with an investment professional or trust person. “Generally, the wealthier the client, the more tailored the solutions,” says Mr Shah. In particular for the ultra-rich, that Citi defines as those having $25m plus of investable assets, tailored services may include art advisory or estate planning services and even aircraft loans. “Clients are looking for global opportunities and prefer to go to those financial institutions that have the platform to deliver global products and services. Most high net worth investors who deal with us look at our suite of products, as they are looking to different avenues to invest, although some clients may just have deposits,” he says. PROTECTING ASSETS Over the next couple of years, asset protection is going to be the main goal, as investors have been more cautious in entering markets on a leveraged basis, states Mr Shah. “One of the things that I have personally learned is that a lot of difficulties clients got into were due to leverage, which can really bite you badly. Also, in our discussion with clients, we have gone back to basics. The more I meet and talk to them, the more I understand their risk appetite,” he says. “Mistakes have been made but they are more driven by what happened in the markets, because in the past five years, no matter what you bought, you made money,” says Mr Shah, acknowledging that in the past “more discussions would have let clients rethink their approach to markets.” Although the majority of products are commoditised, clients generally recognise when good ideas are brought to them, he says. But people and quality of advice remain important differentiators. “In Asia, Citi has probably the best trained people in the industry, most of the other private banks in Asia are run by ex-Citibank persons,” explains Mr Shah. Although this may be flattering in some way, it must also be very frustrating. Poaching, he explains, is a fact of life. “What we can do is compensate advisers adequately and give them experiences in the markets. We have had this issue straight through over several decades; it is not something new just now,” he claims, playing down the losses of private bankers and clients during the crisis. The great freedom of movement that Citi allows between businesses and locations plays its part in retaining and attracting advisers. “All major banks allow movement, but Citi just allows it more,” he says, explaining that in his long career with Citi he has worked in Karachi, London, Dubai and Hong Kong, before resurfacing in the bank’s Asian hub of Singapore.

Money K, Citi Private Bank