Citigroup Woos Rich in Rio to Build Brazilian Client Base

Citigroup Inc., the only U.S. bank with retail branches in Brazil, is focusing on winning clients who use more sophisticated banking services as it aims to build its individual customer base in South America’s biggest economy by 5 percent this year and next.

The bank is trying to lure families with monthly income of more than 5,000 reais ($2,240), Helio Magalhaes, president of the New York-based firm’s Brazil unit, said in an interview at Bloomberg’s office in Sao Paulo earlier this month. Average real income was 2,028 reais in April, according to the most-recent data from the nation’s statistics agency.

Citigroup, the third-biggest U.S. bank, has shifted its focus to 150 cities around the world with the highest potential for consumer-banking growth based on their ability to attract capital, new business, talent and tourists. Of the top 50, three are in Brazil: Sao Paulo, Rio de Janeiro and Belo Horizonte, Magalhaes said. Brazilians meeting Citigroup’s target income threshold will rise to about 20 million by 2020 from 12 million in 2011, he estimated.

“We are transforming the consumer-banking area to serve higher net-worth individuals than before following our international strategy,” Magalhaes said.

Citigroup plans to open a flagship branch in Sao Paulo’s financial center on Faria Lima avenue, Magalhaes said. The outlet will showcase the company’s digital resources, he said.

Citigroup will try to increase the number of clients it serves while relying on fewer branches. Outlets in Brazil have dropped to 79 from 100 in 2012, according to the company, which has been closing branches all over the world as part of its strategy to focus on urban centers.

Credicard Sale

Part of the restructuring in Brazil also included the sale in May 2013 of the Credicard unit, which had 4 million credit cards outstanding. Itau Unibanco Holding SA bought the business for 2.77 billion reais.

“Last year was difficult,” Magalhaes said. “We had to take out of our structure the Credicard business with about 1,200 employees, and that has affected our clients a bit, with changes in structures and systems.”

Citigroup has 350,000 Brazilian retail customers and 50,000 corporate clients, the same as in 2012, Magalhaes said. The firm also has about 1 million credit cards in Brazil under the Citi and Diners Club brands.

Citigroup has about 6,000 employees in the country, Magalhaes said. It ranks 11th by assets in Brazil, with 58.5 billion reais as of March, according to the central bank’s website.

Corporate Banking

About 60 percent of total revenue in Brazil comes from the corporate business, Magalhaes said, adding that the company’s international reach is an advantage over local competitors.

“Brazilian banks are just starting their Latin America expansion,” Magalhaes said. Citigroup is already in 24 countries in the region, where it’s had offices for about 100 years.

Citigroup’s Mexico unit is at the center of a $400 million loan fraud disclosed in February. Top executives of the unit, known as Banamex, have been grappling with regulatory and criminal probes stemming from the fraud, which cost the company about $165 million in the first quarter.

Citigroup said today it agreed to sell its consumer-banking business in Spain to Banco Popular Espanol SA.

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