Best international bank in emerging markets

Global Finance, May 2000 by Haddock, Fiona, Inam, A, Brandman, James

The Best Emerging Markets Banks

CITIBANK

Best in the World

Best in the Middle East and Africa

Best in Latin America

HSBC

Best in Asia

BANK AUSTRIA CREDITANSTALT

Best in Central and Eastern Europe

It's no surprise that Citibank takes top honors again. With a formidable network extending throughout the emerging markets, this global bank has no true rival. The past year has served only to empower more solidly the financial empire it has managed to assemble over the past century. While many banks were trembling in the face of the emerging markets crises, Citibank recommitted itself to building its local banking franchise in wholesale and retail operations as well as asset management through continued acquisitions and product expansion. According to a proud chairman, John Reed: "It's in our DNA."

In many overseas markets, Citi is tops because its bankers got there first and have competed ferociously ever since. Says Victor Menezes, chairman and CEO of Citibank N. A. "We have deep roots and strong relations in these countries, going back to 1902 in many of them. That historical presence, coupled with the wealth of products provided by the entire Citigroup, is what gives us our dominance."

The globalization trend has also worked to Citi's advantage, he says, as developing economies have grown to require the same sort of sophisticated services that Citi offers in the United States and Europe. On the other hand, deregulation and reforms in Latin America and other markets have opened the doors to the entry of strong new foreign banks in those markets. "It is clearly more competitive in Latin America today with the arrival of the Spanish banks and others, such as HSBC," Menezes says.

These markets, as well as those in other regions, are also becoming Internet banking battlegrounds. "We're gearing up in Brazil and some other countries to compete with online exchanges for financial products and other services, as well," he says.

Among its recent accomplishments in South America, Citi can boast the acquisition of Banco Mayo, a consumer and corporate bank based in Argentina, which gives it an impreslive 106-branch network and makes it the second-largest private bank in the country. It has also set up shop in Bulgaria for the first time and has already been involved in a number of local deals.

Meanwhile, in South Africa, Citi launched a $120 million venture capital fund to provide capital assistance to entrepreneurs, financing management buyouts, privatizations, and start-ups. It also put in place a $200 million loan facility with the Overseas Private Investment Corporation to bring investmenu to 22 countries in the Caribbean and Central America. Citi has further chosen to focus on the small and midsize companies in emerging markets, which are notoriously underserved. With the use of a global business platform based on Internet technology, this new service has now been launched in 12 countries, and there are plans for a significant expansion. Citibank also wins as the best regional bank in Latin America and the Middle East.

We've chosen HSBC as best again in Asia and Bank Austria Creditanstalt in Eastern and Central Europe. Needless to say, Citibank has also made an impressive mark on both these markets and is likely to grab a further chunk of market share over the coming year.

LATIN AMERICA

No other bank in Latin America can match the size and scale of Citibank. Not only has it been in the region for 83 years, and become a household name among at least three generations of Latin Americans; it also offers the most comprehensive service package and widest international network among all the banks in the region. Citi's merger in 1998 with Salomon Smith Barney has boosted its activities in investment banking as well. Among the services it offers in the region today are loan syndication, project finance, merger and acquisition advisory, debt and equity capital raising, treasury services, asset management, consumer banking, private banking, retirement services, consumer finance, and credit cards.

The bank is located in 24 countries, with assets of $50 billion, 2,900 distribution points, and 22,000 employees. It has $46 billion in assets under custody, $33 billion under management, and raised more than $23 billion in capital for its customers in 1999.And it completed the largest amount in M&A deals-$29.8 billion."We also own 100% of our franchises, which is something not a lot of other international banks in the region do," says Michael Contreras, executive vice-president for Latin America Global Corporate & Investment Banking. In addition, Citibank remains the most profitable foreign bank in Brazil, the major Latin market, with the highest return on eqcity at 44%, according to Paulo Ribeiro, analyst at Standard & Poor's.

Overall, however, the bank remains too focused on high-net-worth clients, says Ribeiro. It has been making moves to expand into retail banking, he adds, and the strategy will become clearer this year "We cannot be everything to everyone," says Contreras. "But Latin America is a very important market for us, and we are looking to double our size in the next five years and do what it takes to capture the largest market share."