Citigroup Inc. (NYSE: C) is seeking to expand in Asia, and has started brokerage operations out of Malaysia trying to capitalize on the growing market. The firm similarly opened offices in Indonesia last month, and Vietnam is believed to be next on the list. As Citi struggles to recover from the financial crisis of 2008, coupled with negative consumer views of them in the US since the government bailout, expansion into Asia could provide an important spark for the firm.
During the first half of 2010, Citi opened 27 new branches in the greater Asia-Pacific region, leading to 710 branches in total. The company also intends to open another 70 branches in this region within a year. While the US recession deepened, and concerns over a potential double dip escalated, the fast growing Asia-Pacific market has become the new destination on the corporate strategy map. With significant infrastructure investments in the region accelerating growth, a new batch of bank customers is growing, along with an increasing group of wealthy investors. Just as HSBC (NYSE: HBC) is shifting their strategy to Asia, other firms are clearly following in suit.
In the first half of 2010, the Asia Pacific region comprised roughly 35% of Citi’s global net income, making the region the biggest contributor outside of North America. Additionally, the firm plans to triple its workforce in China during the next three years, echoing similar sentiments of JPMorgan Chase & Co. (NYSE: JPM), Goldman Sachs Group Inc. (NYSE: GS), and UBS AG (NYSE: UBS).
Citi’s road to recovery is long, and it may be slow, but the actions being taken today are surely setting the firm up for success in the new economy, into the distant future. When we couple the growth taking place in Asia with the uncertainty in the US due to financial regulatory reform, it becomes very clear that US financial institutions will be shifting strategy dollars into the region in the coming years. As all the major banks have made significant commitments to the region, who ultimately wins out will provide important bragging rights, and profits for the firm capturing the lion share.
