The Global Wealth Management operations
of Citigroup are achieving major success across Asia, including
Japan. Europe is being relatively eclipsed, although Citigroup
strongly rejects rivals’ claims that it has placed this region on
the backburner.

Citigroup’s $1.8 trillion Global Wealth Management (GWM) operations
are being increasingly driven by a hugely successful business
across Asia.

Of total international net revenues outside the US for the first
nine months of 2007, more than 70 percent came from the
Asia-Pacific region. These revenues included new business in Japan,
where the acquisition of brokerage Nikko Cordial is helping to
create fresh growth after Citi’s private bank was closed in 2004
for regulatory infractions.

The powerful performance across Asia now far outstrips the scale of
Citigroup GWM across Europe, Middle East and Africa (EMEA).

Asia, including Japan, produced net revenues of $2.25 billion in
the nine months, or 70.6 percent of international business. By
contrast, EMEA produced $384 million or 17 percent of total
revenues generated internationally. The rest comes from Latin
America, including Mexico. By contrast, Citi’s US-based wealth
management businesses produced the lion’s share of revenues – $7.28
billion, up 13 percent in the equivalent period of 2006.

Tokyo black list

In Asia, Japan alone produced $833 million of revenues in the nine
months, while the rest of Asia, including Citi’s successful Hong
Kong-based business, $753 million. This may signal that although
there has been no officially declared removal of the Japanese
blackballing, the fact that Citi is including Japanese wealth
management in its earnings statements shows that it is effectively
back in the private client business there via the Nikko deal.

Despite its current subprime travails, Citi did perform well in
terms of client assets, which totalled $1.82 trillion at the end of
September. Client assets under fee-based management rose to $515
million. Citi does not segment out the various geographies making
up its assets under management totals.

The head of a rival private bank confirms that is in Asia where
Citi GWM is most impressive. “They have been extremely success in
coupling the private bank and investment bank to generate extra
business,” he says. “It’s become a real partnership. The [Citi] alternative asset structures are first class so I have to say they
have done a really good job in Asia.”

Citi indirectly confirmed the importance of Asia to its wealth
business when it recently announced the appointment of Wilson
Wai-Seng So as global market manager for Citi Private Bank in Hong
Kong. He will manage more than 100 private banking professionals
serving Hong Kong, which the bank described as its “single largest
market outside the US”. Citi also has a big Smith Barney operation
in Hong Kong, feeding off the huge Chinese appetite for equity
trading, rivals say.

A GWM spokesperson, meanwhile, strongly refutes rivals’ claims that
Citi is getting off the pace in European wealth management.

One big competing global private banking head said: “We just don’t
see them [Citi] in the competitive arena in Europe any more. There
doesn’t seem to be any real recruiting or effort to make
competitive pitches to the big clients.”

International strategic momentum

Citi replies that this doesn’t recognise the strategic momentum it
has built up internationally. The bank has aligned its EMEA, Latin
America and Asia-Pacific business into GWM International, under
Deepak Sharma, its CEO, who, for nearly a decade, led the growth of
the Citi Private Bank in Asia-Pacific. The strategy for global
growth is now three-pronged. The aim is to invest and generate
growth in the new emerging wealth markets such as India, China, the
Middle East, Korea, Russia, Turkey, Brazil and Mexico, among other
countries, as well as in some established markets such as the UK,
Greece, Taiwan, Hong Kong and Singapore.

Then the game plan is to provide an even more robust platform of
services, “promoting our unique brand of wealth management,
combining private and investment banking capabilities customised to
the clients’ wealth needs, whether personal or business,” the
spokesperson says.

Finally, Citi is placing greater emphasis on talent recruitment,
development and expansion. This strategy is already showing
positive results globally, the spokesperson contends. The EMEA
business is growing strongly and is expected to be “even more
formidable in future years as it focuses on enlarging its product
and banker capabilities in key markets where the growth upside is
greatest”.

New head for EMEA

EMEA is now the responsibility of Catherine Weir, who was
parachuted into London this August from Citi’s successful Asian
businesses to be chief executive of the region. She replaced
Marianne Hay, a former Morgan Stanley executive, who left the
bank.The appointment of Weir, who was head of Citi markets and
banking for the Association of South-East Asian Nations region,
coincided with a rationalisation under which the EMEA wealth
business, managed as two distinct business groups covering Europe
and Middle East, were then merged into a single unit.

Weir, with her capital markets background, is probably positioning
to match the useful private-investment banking synergies that have
successfully been captured in Asia – a strategy that needs little
or no new investment but rather better internal management
co-ordination.

The GWM spokesperson insists that the growth of UK onshore platform
has made outstanding progress since Citi first focused on this in
2005 and that is performing ahead of plan. In the UK, GWM now has
25 senior client-facing bankers backed up by a significant number
of investment management, credit, hedge fund and private equity
specialists.

“With our focus on clients typically with investable assets of £10
million [$20.7 million] or more, our hiring activities are much
more selective than competitors. We only take the best. The
acquisition of Quilter from Morgan Stanley earlier this year
provides a complementary discretionary platform, giving us ten
locations across UK including Dublin and Glasgow,” the GWM
spokesperson stresses.

The spokesperson declares: “Citi has had a renewed focus on growth,
talent and platform expansion in its international markets where
growth is expected to outpace that of the US business.”