Citibank won’t go for Indian subsidiary, eyes digitisation
Apr 10 2014 , Mumbai
Anand Selvakesari, country business manager, global consumer group, Citi India, told journalists that after reviewing the central bank's terms and conditions on the subsidiarisation model from its business model perspective, the bank decided not to go for it. But he refused to specify why Citi would not adapt the WoS model.
In November last year, the Reserve Bank of India (RBI) released guidelines for foreign banks with more than 20 branches to convert into wholly-owned subsidiaries. The guidelines made it mandatory for foreign banks that entered the country after August 2010 to become subsidiaries, while giving the option to continue through the branch model to those that launched operations before August 2010.
RBI said all foreign banks that become WoS would be given near-national treatment, apart from capital gains tax and stamp duty benefits. Except DBS bank, no other foreign bank has shown any keenness to operate through a subsidiary model.
Jonathan Larsen, Asia Pacific head for consumer banking at Citi, said, "India is among our top 10 markets in the world in terms of revenue. We believe the traditional banking model is changing due to digitisation. The future of business is digital. Fifty per cent of the world population lives in cities. Branches perform a different role. Even today in India and around the world, 95 per cent of the transactions happen outside a branch."
Selvakesari said the new clients like to engage with the bank digitally. "We have 42 branches now and a leadership position in core businesses. As and when we get licences (to open branches), we will take them. Right now, we are not going for the subsidiarisation model."
The bank recently got approval from RBI to open three new branches in Nagpur, Hyderabad and Mumbai.
To a question on Citibank Korea, Citigroup's South Korean unit that has announced closure of nearly one-third of its branches, Larsen said the situation in Korea was different from that of India. "We are focusing on urban centres and have done quite a lot of network reshaping. We have closed or relocated branches in all markets, but are not reducing our market."
The bank on Thursday launched two international credit cards, Citi Prestige and Citi Ultima Infinite, targeted at global ultra-high networth individuals. Citi Ultima Infinite is a 'by invite only' credit card and will be launched in other markets across Asia.
Citi estimates three quarters of the incremental consumer spending to come from emerging markets by 2020. It says consumer spending in Asia is expected to overtake that of North America soon.