Citibank Malaysia considers its business and growth in the country as a major success story and plans to actively participate in its next wave of growth in services and Islamic banking.
“We think of the transition into the service economy in terms of the spectrum of where Malaysia is heading,'' Citigroup's new country officer for Malaysia, Piyush Gupta, told StarBiz.
“The best thing to do is to go with the flow. This has two imperatives for a company like ours. We need to understand where the country is headed in terms of the macroeconomic and policy framework.
“We also need to go with the global flow as there is a correlation between global economics and local trends. Finally, we need to understand global trends, opportunities and change and then bring that to bear in the context of the Malaysian focus,'' he said.
He sees that the shift of Malaysia into services, especially into transport and logistics, would require a tremendous amount of specialisation. “We have global shipping and airline expertise and capability. As Malaysia moves into those related sectors, there will be opportunities for players like us.''
The present shift into a domestic-driven economy has resulted in increased demand for consumer finance to purchase property, motor vehicles or white goods.
“The biggest chunk of consumer demand gets driven by easy availability of consumer financing,'' he said. “We have a role to play by increasing transparency of banking products and services, bringing in modern and innovative quality services, while making it more convenient to obtain financing from us, and to deal with us.''
“In addition to consumer demand, we want to build the SMI (small- and medium-sized industry) sector. Over the last three or four years, we got into the SMI business and have consistently built up the segment in wholesale and retail trade, exports, transport, machine manufacture, woodwork and furniture. We will continue with our growth in the SMI sector, which is again linked to a government policy,'' Gupta said.
Within Islamic banking, which is another policy imperative, Citibank Malaysia soft-launched a whole range of Islamic products last year.
This year, it is launching Islamic consumer liability products, Islamic mortgage products and an Islamic trade finance product. The bank is already a leader in the Islamic capital market and has had an Islamic leasing product for some time.
“Today, 9%–10% of the banking industry is already in Islamic finance and it is heading for 20%. We believe it will happen, and it's a great area of opportunity for us,” Gupta said. “We have a big Islamic presence in the Middle East. We were an Islamic global player some 20 years ago, and our ability to bring Islamic technology from London and the Middle East markets is actually quite good.''
“We have an amazing franchise in Malaysia,'' he said. “The bank opened in the late 1950s, and even though some of the local banks are as old as Citibank is in Malaysia, some of the foreign banks go back 100 to 150 years. If you look at what we have been able to achieve, it is astonishing.''
He said Citibank had a dominant share in the cards business and a significant share in the mortgage finance business. Perhaps less well known is that it has a dominant position in corporate banking.
For a number of years, Citibank has been the number one cash management bank in Malaysia. It is the top-rated custodian bank in Malaysia and the number one global loan syndication in the country for 2002 as ranked by International Financial Review.
It is in the top three in the ringgit bond market, after CIMB and RHB, as rated by Thomson Financial Services and Rating Agency of Malaysia.
“Last year was a really good year for us. Citigroup did the Petronas bond deal which was rated the number one international bond of the year in the emerging markets,'' Gupta said.
It also handled the Celcom bond deal, which was rated the number one local currency bond deal in Asia. The Malaysian Airlines aircraft financing deal, which was transacted by Citibank, was rated the number one aircraft finance deal in the world.
“If you look at the range of our presence, we have huge scale here with just three branches. It is something to be tremendously proud of and we think of Malaysia as a major success story. In many ways, Malaysia is a crown jewel for us in the region,” said Gupta.
“We find that, from Malaysia, we can take out and roll products to the rest of the region, for example, the Youth clear card which we introduced last year. We innovated and introduced it in Malaysia and, today, we have rolled it out to eight countries in Asia. Because it was such a successful story in Malaysia, we figured it would be equally viable in other countries,'' he said.
In Islamic banking, Citibank Ma- laysia is among the top players in the Islamic capital market along with CIMB.
In 2001, we were, in terms of assets, size and balance sheet, the fourth or fifth largest foreign bank in the country. Last year, we were the second largest after HSBC Bank in terms of assets; but in terms of profit before tax, we were already number one last year,'' he said.
Including its sales force, it em- ploys over 4,000 people and another 500 in its Penang global hub.
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