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Citigroup (NYSE:C) is taking a slightly different approach to its global operations than its rivals did. As most banks are falling back and withdrawing from the global market to restructure and regroup, Citigroup is using the opportunity to trim down its underperforming markets, and bolster its growth and returns in other areas.
About 21 markets were targeted for falling short on their returns, and 18 have been marked for “optimisation.” The company is freeing up resources at its underperforming divisions, and moving the allocations to other markets, such as Singapore, Mexico, Hong Kong, and India.
After a 7.9 percent return on equity for 2012, the company is hoping that improvements made in its global sector will push that number over 10 percent.
Citigroup was bailed out by the U.S. government in 2008, and since then, like its constituents, it has shied away from trading, and focused more on lending, advisory, and treasury services, Reuters reported. Loans in particular have increased substantially, especially abroad. The average loans made to institutional clients was $234 billion in 2012, or 60 percent more than in 2009.
Jim Cowles, chief of Europe, Middle East and Africa for Citigroup — Michael Corbat’s position before he stepped into his current CEO role — believes the balance sheet, along with Citigroup’s access to cheap US dollar funding, should help it win further market share in EMEA and elsewhere as rivals retreat, although he is cautious in his beliefs.
“Leading with the balance sheet is a bad way to go as both clients and banks can become addicted,” he said. “However, it remains an important part of what we can offer clients, especially in Europe where companies need dollar financing and many of our European rivals just don’t have the access to dollars they once did.”
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