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Andy Mukherjee

Wall Street Invaders Won’t Clear This Moat

Citigroup has a $715 billion buffer to hold back the covetous rivals such as Goldman Sachs eyeing its dominant transaction banking business.

Cleaning up by serving the detergent makers.

Cleaning up by serving the detergent makers.

Photographer: Ramin Talaie/Bloomberg

Supply-chain finance is the secret sauce behind Citigroup Inc.’s mid-20% return on equity from transaction banking.

That might sound counterintuitive, especially in Asia. The export-led region is facing the brunt of supply dislocations as the U.S.-China trade war intensifies. But the skirmish isn’t a showstopper for financing. As production moves from one country to another, transactions that need to be greased with money or credit will occur somewhere else. They won’t disappear.