The bank will triple its workforce to as many as 12,000 over the next three years and open 10 new offices in a bid to expand consumer banking in the fast-growing market
Citigroup Chief Executive Officer Vikram Pandit is raising his bet on China, where banks extended a record $1.4 trillion of new loans last year. Citigroup (C) plans to nearly triple its workforce in the country, to as many as 12,000 in the next three years, intensifying its rivalry with London-based HSBC Holdings (HBC) in the world's fastest-growing major economy.
The New York-based bank will hire more people in China than in any other Asia-Pacific country, says Stephen Bird, Citigroup's co-CEO for the region. The expansion may make China Citigroup's third-largest market by staff, after the U.S. and Mexico, says spokesman James Griffiths. "This is a strong message from Citigroup that signals the bank's focus and dedication to the country," says Michael Werner, an analyst at Sanford C. Bernstein in Hong Kong.
Citigroup has 29 branches in the country and plans to add 10 more this year. That will still leave it short of HSBC's 102 and the 59 operated by London-based Standard Chartered, which gets more than three-quarters of its profit from Asia. "China is one of Citi's priority markets globally," says Bird. "We have aggressive consumer-banking expansion plans and want to open branches as fast as regulators in China will let us."
Bird says consumer and institutional banking will account for about 80 percent of new hiring in China. The remainder will mainly be for technology support and data processing. Citigroup has 4,500 employees in China and 50,000 in Asia, according to Griffiths. Standard Chartered has more than 4,000 employees at its China unit; HSBC, Europe's largest lender by market value, has more than 5,000. Industrial and Commercial Bank of China, the world's largest lender by market value, had 390,000 workers at the end of 2009.
China, which opened its banking industry to overseas companies in December 2006, is attracting foreign lenders scarred by the global financial crisis that forced Citigroup into a $45 billion U.S. government bailout. HSBC is focusing on emerging markets such as China following losses at its U.S. unit.
Asia was the largest regional contributor to Citigroup's earnings in 2008 and 2009, a period during which it lost a total of $29.3 billion worldwide. This year, Citigroup recorded a first-half profit of $2.5 billion in the region on revenue of $7.26 billion. Deposits in Asia rose 20 percent in June from a year earlier, to a record $220 billion, Griffiths says. The bank offers mobile banking in most of the 18 markets in the region it serves and started retail banking in Vietnam in the past year.
Citigroup is also expanding in Taiwan and Hong Kong, where it has 66 and 41 branches, respectively, Bird says. "Just a couple of years ago we were under 50 branches in Greater China, and in the next six months we should hit the 150 mark."
The bottom line: Going where the growth is, Citigroup is investing heavily to expand its presence in the rapidly expanding Chinese market.