Citi’s reputation as a driving force in financial technology stretched into the 1990s, when more than a million customers received floppy disks biannually with software updates, enabling proto-internet banking.
These innovations helped drive international expansion. Mr Reed became the bank’s chief executive in 1984 and an ever-wider array of markets were opened, extending from Nigeria and Sweden to (via a Hong Kong acquisition) Thailand, as well as particularly swanky efforts in London and Geneva. Augmenting the branches were call, processing and innovation centres in numerous places, including Silicon Valley, the Philippines and perhaps most importantly India, where they played a critical role in germinating the country’s vibrant technology-outsourcing industry.
The bank’s drive was a magnet for bright people. Alumni included a former prime minister and the current finance minister of Pakistan, a former central-bank governor of the Philippines and the future leaders of innumerable financial institutions, including the largest private-sector bank in India in terms of assets, HDFC Bank-whose market capitalisation alone is more than 90% of Citi’s-and DBS, whose present chief executive came to the bank after being a star at Citi.
In many ways this reflected Citi’s success but it also https://getbadcreditloan.com/payday-loans-al/camden/ illustrated its vulnerability. Success transfer ultimately meant creating capable competitors. Local regulators created their own obstacles, limiting the rights of foreign banks to open branches or link international accounts, thereby undermining economies of scale. Technological in. Rivals, including those run by former Citibankers, copied Citi’s innovations, sometimes improving on them or offering them more cheaply.
Then came the global financial crisis in 2007. After incurring huge losses on over $300bn of risky assets, Citi required a bail-out-revealing that, in a pinch, it was an American, not global, institution. This was underscored by stringent new domestic regulations complicating, when not blocking, international transactions.
Aware of the identification challenge that existed in a transition from human contact in branches, the bank experimented with the retina-scanning technology that, along with facial recognition, is only now becoming common
That began a long period of contraction. Early to go was the German retail operation, for $7.7bn, then others in Turkey, Brazil, Egypt and over a dozen other countries. It was as if the United Nations of banking was being unwound. The Asian and Mexican operations remained, each in different ways offering much potential.
But Ms Fraser, who joined the bank in 2004 and was less tied to the old strategy, concluded that the bank lacked the scale needed to compete in many of its markets
A striking feature of the final reckoning has been how little the Asian operations really mattered to Citi’s results. Their presence vastly exceeded their financial relevance: the Asian businesses that are being sold accounted for only 1.6% of group earnings in 2021. This helps explain the paucity of bidders. None of the businesses have been bought by Standard Chartered or HSBC, and their own far-reaching operations are now questioned. Years ago JPMorgan Chase’s boss, Jamie Dimon, formerly of Citi, considered replicating its global network, only to conclude that building a retail business market by market wasn’t viable. It is also striking that Chinese banks, the new Goliaths, have made barely any effort to build foreign retail operations.
Buyers of Citi’s Asian assets, to the extent they have emerged, are fully or somewhat local. True, Singapore’s DBS and UOB have been willing to acquire abroad, but Taiwan and Vietnam are hardly far-flung, especially for banks whose home market is small and serves as a hub for Asian finance. Local and regional consolidation would seem to be more reflective of the times.