Quick to reassure clients, customers and employees alike, Citigroup South Asia CEO Sanjay Nayar used news of the US government?s relief package to dispel rumours of any shutdowns or sackings in India. ?We hope it puts to rest the unfounded rumours on our financial position and brings the focus back to the fundamentals of our global franchise,? he said in a statement.
He added that throughout these difficult times, Citi India had maintained strong and stable operating income, unparalleled access to funding, extraordinary levels of liquidity and the best talent in the business. ?This announcement sends a strong signal to all our clients here in India about our continued commitment to serve them as we have been doing for more than 106 years,? Nayar added.
However, analysts and trade experts say Citi is still not out of the woods, even in India. ?Overall, business has shrunk, not just pure fund-based business, but also in fee-based businesses like investment banking and stock broking. Therefore, there is bound to be an impact,? said one baking sector analyst.
Nevertheless, Citi officials were optimistic that the bank?s domestic banking plans were on track, citing the opening of two branches in Kurnool (Andhra Pradesh) and Nanded (Maharashtra) later this fiscal.
The bank opened a branch in Akola (Maharashtra) in May 2008.
On rumours of Citi shutting down its non-banking financial services arms, industry experts see the consumer finance business becoming extremely risky, as the cost of borrowing has risen drastically. Even sound companies have been raising funds at 15-20% rates. ?Lending in the consumer finance business at 20-22% is inviting bad assets as only the desperate would borrow,? reckons the analyst.
Rubbishing rumours of being closed down, a Citifinancial spokesperson said, ?We are totally committed to this business. There is no change in the status of the business. We are not closing down Citifinancial.? The spokesperson also made it clear that there would not be any layoffs, either. Citifinancial has around 3,000 employees.
Citi India officials also made it clear that no staff would be retrenched at any other division, either. ?Apart from the sale of Citigroup Global Services Ltd, where 12,000 officials will leave to join TCS after the sale of the unit, there will not be any other job cuts,? said the spokesperson. Besides those at CGSL, Citi India employs 11,000 people.
However, industry observers remain wary of such statements, saying that as recently as a month ago, the parent sought to buy another bank, the ailing Wachovia, and now Citigroup itself was getting a US government bailout. ?Time will tell,? said one analyst wryly.