According to a Reuters report, Citigroup Inc. (C) intends to continue its investments in China and increase its workforce there. The move comes as part of the company’s effort to tap opportunities in one of the world’s fastest growing economies. The Reuters report cited an interview with Citi CEO Vikram Pandit in China Daily.
Faced with a slowdown in the U.S. market, Citi is emphasizing on growth in the international markets. The company has an impressive overseas presence and is making every effort to expand and tap opportunities in the emerging markets.
Recently, Citigroup’s Chinese subsidiary Citibank (China) Co. Ltd. received approval from the China Banking Regulatory Commission to launch its own credit card business in that country. The company will launch both retail and commercial cards before the end of this year. This marks a landmark for Citigroup — the first U.S.-based bank to introduce its own credit card in China.
Citi currently has its business in institutional and consumer lines in China and expects this credit card business launch to boost its growth momentum there. Only last month, Citi’s securities joint venture (JV) in China with Shanghai-based Orient Securities Co. received a regulatory nod. The JV will be named Citi Orient Securities Co. and will carry on investment banking activities including securities underwriting and sponsoring. Besides Citi, J.P. Morgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS) have also set up such JVs in China.
Citi’s efforts to expand its business in China are part of its strategy to explore its thriving economy and booming consumer and commercial market. Hence, investments are required and we expect such efforts to bear fruit in future. Citi’s global network will be enhanced and its revenue base is expected to benefit by leveraging on faster-growing economies like China, thereby increasing its market share internationally.
Citi currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
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