Citigroup sets sights on the Emirates and Middle East

Citigroup sees the UAE as a growth opportunity. Mario Tama / Getty Images / AFP

LONDON// Citigroup, the New York-based lender, is targeting expansion in the UAE.

Citi, which recently exited its retail banking businesses in Turkey, Romania, Greece and Pakistan, said it sees potential in the Middle East’s booming economies and fast-growing populations.

“We are looking at the UAE as a growth opportunity,” said Jim Cowles, the bank’s chief executive for Europe, the Middle East and Africa. “We’ve got a very significant franchise that covers everything from our consumer business to all our institutional businesses. We think that’s an area of the world that’s going to continue to have a healthy GDP, healthy demographics. Given the size and scope of our business, we think that creates an opportunity.”

As global banks become subject to more regulations, such as Basel III, that will force them to take less risk in various ways, including limiting the amount they can borrow, they are becoming increasingly picky about where they focus their firepower and what lines of business they chose to get involved in.

Mr Cowles said that Citi, which is the top credit-card issuing retail bank in the United States, had decided to sell its consumer business in Greece, Turkey, Pakistan and Romania so that it could focus on its more-lucrative institutional operations in some of those countries.

Along with the UAE, Citi is also bullish about prospects of growth for its business in Ireland, Italy, Portugal, Spain, sub-Saharan Africa and its remaining operations in Greece, he said, declining to give details about how much the bank would be spending or how many more people it would hire in those regions.

“The UAE is becoming more and more of a hub for international companies, global businesses who are not only doing business in the Middle East but also in the Middle East and Africa,” Mr Cowles said. “We see a number of our clients opening up their regional headquarters in the UAE. So that’s one area where we are realising growth in that part of the business and it’s one of our fastest-growing in the world. We’re seeing the migration of our global clients to the UAE.”

The UAE economy grew by more than 4 per cent last year amid government spending on infrastructure, record-low interest rates and a rebound in trade and tourism.

Banks here have been one of the key beneficiaries of this growth as businesses tap them for loans to fund growth and individuals rush to borrow cheap money to buy homes, cars and other consumer items. But the competition between banks, of which there are more than 50 in the UAE, has become particularly intense, with many international banks, such as RBS and Llyods, choosing to sell with their local consumer operations.

In the UAE, Citi wants to attract affluent customers to its retail banking business, and like other international banks in the UAE, it touts its ability to give its clients access to accounts at Citi in other parts of the world. However, instead of dramatically expanding its physical presence on the ground, Citibank says it will focus instead on digital banking in a bid to attract the tech-savvy and affluent who no longer place a premium on the branch network.

“On the consumer side, it’s about looking at what is your appropriate client base,” said Mr Cowles. “We look at the wealthy, we look at the affluent. We look at what we call the aspiring affluent, in terms of our client base. We’re not going in and banking everyone in terms of all the different classifications. We think we have a competitive advantage in terms of the products we offer, but we also believe we have competitive advantage in terms of our globality.”

Citibank, which operates only five branches in the UAE and does not offer as many services as competitors, said last month it would introduce a number of new financial services and products, including mortgages, in the fourth quarter of this year.

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