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Citigroup to grow worldwide Original Source Link: (May no longer be active)
http://www.forbes.com/home_asia/newswire/2004/02/23/rtr1271946.htmlhttp://www.forbes.com/home_asia/newswire/2004/02/23/rtr1271946.html
Citigroup may grow more in consumer, outside U.S.
Reuters, 02.23.04, 12:37 PM ET
By Jonathan Stempel
NEW YORK (Reuters) - Citigroup Inc.'s deal to buy South Korea's KorAm Bank for $2.73 billion likely foreshadows more non-U.S. and consumer banking purchases for the world's largest financial services company, analysts said Monday.
"The financial world is getting smaller and smaller," said David Katz, chief investment officer at Matrix Asset Advisors Inc., whose $1.4 billion of assets include Citigroup shares. "That means that instead of looking at one finite area in the United States, Citigroup must look at the opportunity costs and growth prospects elsewhere."
Beating out Britain's Standard Chartered Plc, Citigroup on Sunday agreed to pay $1 billion for a 36.6 percent stake in KoRam and will tender for the remainder, including 9.8 percent owned by Standard Chartered.
The purchase would create South Korea's fifth largest bank, adding about 6 million customers in the country to Citigroup's 1 million, 3.4 million credit card customers to Citigroup's 600,000, and 222 branches to Citigroup's 12.
"As we look forward over the next five to 10 years, it's clear to us that international markets will grow faster than the U.S. (and) will have higher returns," said Deryck Maughan, Citigroup International's chief executive, in an interview.
Under Charles Prince, who became chief executive in October, Citigroup has expanded its U.S. consumer business. It bought Washington Mutual Inc.'s consumer finance unit for $1.25 billion and completed its roughly $3 billion purchase of Sears, Roebuck & Co.'s credit card unit.
Citigroup faces growing U.S. competition from No. 2 rival J.P. Morgan Chase & Co., which agreed to pay $58 billion for Bank One Corp., and No. 3 Bank of America Corp., which agreed to pay $47 billion for FleetBoston Financial Corp.
Citigroup's last major purchase was in 2001, when it paid $12.5 billion for Mexico's Grupo Financiero Banamex-Accival. This month it launched its first credit card in China.
'WHOLE GLOBE'
"When we look out and think about spending 45 or 50 billion dollars, we have to look at the whole globe," Chief Operating Officer Robert Willumstad said in a Feb. 12 presentation.
He said Citigroup may grow in South Korea, Brazil, China and India, and expects to be a significant player in large population centers. He said Citigroup would also like to grow in the New York City area, California, Florida and Texas.
"Citigroup is very good at deploying its own capital, unlike some other financial institutions," said Gordon Fowler, chief investment officer at Philadelphia's Glenmede Trust Co., whose $15 billion of assets include Citigroup shares.
"The interesting thing here is that at a point where many in the investment community are looking at the retail market as potentially being at a top, Citigroup is continuing to invest, but in a fairly unique way" by targeting emerging markets, Fowler added.
Citigroup in 2003 had profit of $17.9 billion, up 17 percent from a year earlier, including $9.85 billion from its consumer business. Profit in Mexico, Latin America, Europe and Asia was $6.36 billion, up 18 percent, and its non-Japanese Asian business took in $1.77 billion, up 14 percent.
"We view Asia, as a whole, as relatively stable economically, and with very good economic prospects," Maughan said. "We would like to play a prominent financial role."
Copyright 2004, Reuters News Service
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