Citigroup Reduces Russian Expat Senior Bankers by 40%

Citigroup Inc. (C) cut the number of senior expat bankers in Moscow by more than 40 percent over the past four years and replaced them with Russians, according to Zdenek Turek, the lender’s outgoing Russia chief executive officer and head of Central and Eastern Europe.

Czech-born Turek, who was promoted to run Citigroup in Western Europe, said the New York-based lender is grooming local talent who will eventually assume the top Russian role. He was replaced this month by Frenchman Marc Luet.

“There will be a Russian head of Citigroup in Russia one day,” Turek, 49, said in a Moscow interview on Sept 18. “We are grooming more and more Russian managers. When I came here compared to today, we dropped the number of senior expatriates by more than 40 percent to 11 from 19.”

During Turek’s five-year tenure, Citigroup promoted Michael Berner and Maria Ivanova, the first Russians to run consumer banking and multinational companies, respectively. The bank’s treasurer, Denis Korshilov, is a Russian as is Svetlana Klochko, head of banking. Andrei Kurilin, chief operating officer, is also a Russian while Irackly Mtibelishvily, chairman of corporate and investment-banking Russia and the Commonwealth of Independent States, is from neighboring Georgia.

Fourth Ranked

Citigroup, which returned to Russia in 1992 after a 72 year hiatus following the collapse of the Soviet Union, is one of a handful of foreign banks that have prospered in consumer banking as state lenders have gained market share. It ranks fourth among foreign retail banks, with more than 1 million clients, said Denis Denisov, a Citigroup spokesman. The top three foreign lenders, France’s Societe Generale SA, Austria’s Raiffeisen Bank International AG and Italy’s UniCredit SpA, have expanded by making acquisitions while Citigroup has largely grown organically.

HSBC Holdings Plc, Barclays Plc (BARC) and Banco Santander SA are among international lenders that abandoned consumer banking in Russia over the past two years due to the dominance of OAO Sberbank and VTB Group, the two largest Russian lenders.

“Many of these banks experimented but did not achieve scale and didn’t spend enough time on customer segmentation,” Turek said. “The Russian market is very large with 140 million people, and you cannot strive to be everything for everyone.”

Citigroup has focused on the growing Russian middle class with its Citigold wealth-management product, which targets customers with a monthly income of at least $10,000. The average monthly salary of its loan and credit-card clients is 45,000 to 60,000 rubles ($1,400 to $1,800), the bank said.

Corporate Clients

U.S. companies looking to enter Russia make up a third of Citigroup’s corporate client base, Turek said. Other companies looking to exploit the country’s consumer sector are mainly from Asia and Western Europe, he said.

“We have a lot of loans to multinational companies that are either financing the working capital or building factories and buying technology,” Turek said. “For Russian clients, we are mostly a window for them into the international market through syndications, M&A advisory, raising equity and bonds.”

Citigroup is only lagging JPMorgan Chase & Co. (JPM) as the biggest arranger of Russian euro bonds this year, having worked on 11 deals valued at $3 billion, according to data compiled by Bloomberg. Citigroup missed out on advising the Russian government on its $7 billion foreign currency bond to JPMorgan, Barclays, Gazprombank, Renaissance Capital, Royal Bank of Scotland Group Plc and VTB Capital. The bank is the third-biggest arranger of mergers and acquisitions this year, behind Deutsche Bank AG and VTB Capital, the data show.

The bank is profitable in Russia, and its balance sheet has doubled during his stint in charge, said Turek, who combined his new London-based role with his Moscow position until last week. It has about 4,000 employees in Russia.

He predicted Citigroup in Europe could outperform European banks, which may have to retreat from markets to focus on their capital requirements and returns for shareholders.

“We are probably a more European bank than most of the European banks,” he said. “Show me European banks that are present in 30 countries across Europe.”

To contact the reporter on this story: Jason Corcoran in Moscow at jcorcoran13@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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