It looks like Citigroup (NYSE:C) has shown the hand it’s going to play going forward, as it is focusing on strongly shoring up its international operations, and as other major banks, realize the domestic U.S. market isn’t where the growth is going to come from in the years ahead.
Teresa Dial was just replaced as head of the North American consumer banking operations by a more internationally experienced banker in Manuel Medina-Mora, who is chairman and CEO of Citi Latin America and Mexico, and will retain that job, while taking over consumer operations in North America as well.
Concerning Japan, the top executive there, Douglas Peterson will be coming back to New York to work for the company, while being replaced by Darren Buckley, head of Citibank Japan.
Similar to the Dial deal, from Citigroup’s perspective, this doesn’t seem to be a negative move in the sense of incompetence of general results, rather it’s putting into place the pieces where they can focus on growing as an international bank beyond their elite customers, which has been the focus and strength of Citibank globally (outside the U.S.), but seems to have been largely tapped into, and so major growth can’t be counted on from the wealthy of the world by Citigroup, so they’re obviously looking toward less wealthy consumers and commercial interests from other countries as the strategy to employ to grow the giant bank.
Much of Citigroup’s hopes in Japan were dashed as far as consumer operations go, as they were able to land the first local banking license in Japan by a foreign bank, but weren’t able to take advantage of that as they landed it in 2007, right when the economic downturn was crushing consumers and businesses.
The Citigroup strategy in Japan is primarily in the retail sector, and it will depend on how quickly Japan recovers as to the growth they’ll enjoy in that market.
To pay for some of the TARP funds it received, Citigroup was forced to divest of some of its commercial assets in Japan to raise money, including NikkoCiti Trust & Banking, Nikko Asset Management and Nikko Cordial Securities Inc. Close to $11 billion was raised from those efforts, helping them to pay off the TARP loans, but also weakening their commercial presence in the country.
We’ll probably see all the major banks make moves like this if their current employees in key international markets aren’t experienced in global economies and markets.
