Citigroup Inc. (C) is planning to boost up its presence in the mainland China market, according to a report in The Financial Times. The company plans to more than double its bank branches in China to 100 from 47 currently in the next two to three years.
Notably, the company has recently won approval for launching its own card business in the country. Citi’s Chinese subsidiary Citibank (China) Co. Ltd. received approval from the China Banking Regulatory Commission to launch its own credit card business in that country.
The company will launch both retail and commercial cards before the end of this year. This marks a landmark for Citi, the first U.S.-based bank to introduce its own credit card in China.
Moreover, Citi’s securities joint venture (JV) in China with Shanghai-based Orient Securities Co. received a regulatory nod in January this year. The JV named Citi Orient Securities Co. will carry on investment banking activities including securities underwriting and sponsoring.
In an effort to gain a foothold in the Chinese market and satisfy the regulatory norms of the conservative economy in that country, companies such as Citi and HSBC Holdings Plc. (HBC) have earlier acquired equity stakes in local companies in China. However, with the new set of Basel III banking rules, holding equity stakes in foreign financial companies will be dearer as such cases need additional capital to be beefed up.
Moreover, in order to explore the growing Chinese economy and tap opportunities, foreign companies are planning to increase their direct presence in China through branch expansions. Also, the Chinese economy is opening up and granting approvals to the foreign companies to expand their network in the country.
According to a Bloomberg report in February, Bank of America Corporation (BAC) is also planning to expand its presence in China and is aiming to double its profits and enhance its workforce.
Our Take
Citi is emphasizing on growth in the international markets in the midst of a slowdown in the U.S. market. The company has an encouraging overseas presence and is making every effort to expand and tap opportunities in the emerging markets.
Citi’s efforts to expand its business in China are part of its strategy to explore its thriving economy and booming consumer and commercial market. We believe that with such expansion efforts, Citi’s global network will be enhanced and its revenue base will benefit by leveraging on faster-growing economies like China, thereby increasing its market share internationally.
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