Citibank wraps up consumer banking
The announcement was made at a signing ceremony held in Karachi, attended by HBL and Citi Pakistan representatives. Speaking at the occasion, HBL President and CEO Nauman Dar said, “HBL will continue to be a key developer of consumer finance products in Pakistan. The acquisition is part of this commitment and ties in with the bank’s mission of creating value for stakeholders, especially our customers.”
Nadeem Lodhi, Citi’s country officer in Pakistan, said, “Citibank was a pioneer in growing consumer lending products in the Pakistani market and has since contributed to strengthening the consumer banking landscape in the country. We have had the privilege to serve our clients, whose discerning requirements and standards were met through our global banking platform. We look forward to working with HBL, to ensure a smooth transition for our customers.”
“Citi Pakistan will continue to focus on its core business of corporate and investment banking serving our multinational, public sector, financial institutions and top-tier local corporate client base,” Lodhi added.
Published in The Express Tribune, November 13th, 2012.
COMMENTS (12)
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Its an American policy quiting investment from Pakistan prior to 2014 when they will be quiting from Afghanistan and thats the time when America shall push hard Pakistan. Sooner after wraping up consumer portfolio by CItibank they will also continue to shuting down its corporate business from Pakistan.
Citi's abrupt closure to close the accounts without the consent of the customers, salaried, with Visa debit cards is shock. Trans national corporation as Citi Corp are the ambassador of the country and follow good governance, CSR in their moves. While endorsing the comments of closure of the banks when the banking Ombudsman was not in seat, and cunningly qued up the people to come and take cashiers cheque. Citi should have respect and recognition of the customers which it has worked with.
Reasons for departure are probably too numerous:
Corporate Strategy Opportunities for an international bank to allocate scarce resources to countries with potential for growth Stagnant local lending market (upper tier segment with proof of income) with only the black or undocumented economy growing Gloomy economic results in Pakistan Govt debt has been the only lending opportunity for banks in the recent past and now those spreads are shrinking and Pakistani govt debt has near junk sta Political turmoil in Pakistan and massive state corruption Anti US sentiment in Pakistan Other foreign (West/Europe) banks and companies leaving Pakistan (BP, HubCo owners. HSBC, RBS etc...) over the last 3-4 years and more expected to leave in the future List goes on and onRising amount of bad loans which are in no way supported by deposits.
Citi exited SME & commercial segment a few years back and is now exiting the Consumer segment as well. The only reason they are in Pakistan is due to the reality check they received in Saudi Arabia, when they divested their share holding in SAMBA, post 9/11.
Since then the bank has tried to re-enter the lucrative Saudi market a number of times but each time they have been rebuffed by the Saudi regulatory authority, as they had advised the bank not to exit the market initially, especially a time when this was deemed a negative step for country's image - post 9/11.
Based on this, the bank is exteremely careful in exiting a market unless the long term view is expected to remain bleak. For Pakistan, with a 180mn strong population, the long term economic view cannot be negative and hence the bank will continue to en-cash its global relationships and on foreign inflows which are always routed through Citi.
Everyone knows they were the pioneers here but atleast bring forward the reasons for there departure.
While Citibank was not the best in customer service, its retail customers will now likely suffer at the hands of the local bank's staff, just like the customers of a foreign bank acquired by a local bank last year are experiencing.
I offer my hearty congratulations to HBL. It is good to see a bastion of Pakistani banking being aggressive in this more up-market segment.
This is, however, just a realisation of the writing on the wall for Citicorp in Pakistan. After the departure of movers like Khizer and subsequent exits of giants like Zubyr and Aftab, the local office has seemed to suffer from comparatively weak local franchise leadership, with limited understanding of the scope and nuances of consumer banking.
In the absence of an experienced bulwark at the helm or an integrated strategy, I imagine that it would be difficult to push back the tide of negativity and anxiousness rushing down from New York, which gained strength from Pakistan's weak macro-economic and political outlook. The rising wave of anti-Americanism probably doesn't boost our credibility either.
I would like to also cheekily tip my hat to Standard Chartered. With the departures/scale down of Barclays, HSBC and now Citicorp, they are conveniently positioned to accept a bevy of new customers with open arms and rosy promises of integrated full spectrum banking.
"Citibank was a pioneer in growing consumer lending products in the Pakistani market" Citi claims to be pioneer in consumer lending products and not pioneer in lending consumer finance. recently there was a news that Sherry Rehman is wooing the foreign investors in USA/ Europe for micro finance (read finance to small business / self employed , small and tiny industries)which is a futile effort as can be seen in wrapping the consumer banking in Pakistan)
Foreign banks are more interested in their so called core business of corporate and investment banking ( Citi does not have any investment portfolio in Pakistan's corporate sector)