Upfront is the issue of fit. A bank that can be integrated with Citigroup and matches its exacting standards. Banks in India that can measure up can be counted on ones fingers. As for those which can, Citigroup, Sir Deryck said is not interested in a hostile bid! He is okay with organic growth; that when a good bet is available, Citigroup will take a look at it. He debunked going in for size for the sake of it. Shareholder returns and margins are more important.
Sir Deryck observed that banking now has in a sense, a post-modernist face to it: physical presence is now becoming irrelevant. That 94 per cent of Citibanks retail customers in India use non-branch channels. It is 91 per cent in Asia.
Strung together, it appears that Citigroup is happy with the way things are going for it at the moment in the country.
Innovative strategy and top-class execution have helped Citibank with just 25 branches as of now to post a net-profit of Rs 392 crore for 2002-03. We have doubled our net-profit over the last five years. The trend will continue, Sir Deryck said adding that India is in the top-league of emerging markets along with China and Brazil. The United Kingdom and Germany are established overseas markets, but growth will not come from there.
Sir Deryck also made it a point to mention that our products do not own the distribution system, our customers do. That worldwide, there is clear demarcation emerging between manufacturers (those who structure a product) and distributors; that the latter is getting more out of it. This is one more factor why physical presence is not required to the extent as in the past. More than a buy, Sir Deryck said that the immediate concern is the gaps on the asset side that Nayar (Sanjay Nayar who is the country-officer of Citigroup in India) keeps telling me. One such gap is the mutual fund business. It cross-sells a suite. The same goes for insurance. It still does not hawk the Travelers brand in India.
To a query on when will Citigroup bring in Travelers into India, Sir Deryck said it is employing a one thing at a time approach. Then added: At the party last night, a gentleman from AIG shook my hands vigorously! provoking uproarious laughter. On whether all this slowness is deliberate, part of a caliberated strategy, Sir Deryck retorted: We at Citi are not good with words, but with numbers!
And here are a few numbers. Citigroup has pumped in more than $600 million in India, making it the single largest foreign direct investor in the financial services sector. Over 900 large companies, 13,000 small- and medium enterprises, and 20 lakh retail customers bank with it. Its business interests cover a full-services bank (Citibank), para-banking Citicorp Finance India Ltd and Citicorp Maruti Finance and Citicorp Global Markets or the ertstwhile Salomon Smith Barney. Citigroup is also one of the largest exporters of software: it exceeds $75 million. It has invested in Orbitech and the listed i-flex Solutions Ltd. Then, there is e-serve, which is into business process outsourcing, and call-centre solutions. Citigroups consumer business corners, inclusive of car-finance, forty per cent of the organised finance segment in the country. It is also the leader in credit-cards with 1.8 million plastic issuances.