Citigroup targets admin market

By PAM GRAHAM

Citigroup is pitching to become Australian banks' engine room for international transactions.

Its Australasian chief Shayne Elliott said that even though the US bank was 80 times the size of the BNZ, the New Zealand market had been a tough nut to crack because local banks were well managed and had big branch networks.

"We accept that we can never displace the local banks with their thousands upon thousands of customers," he said. "But with our processing scale advantages, and their customer base, we make a great team.

"We're saying 'you just focus on your customers and we'll do the back office'."

He is talking about the outsourcing of foreign exchange payment processes such as foreign exchange deals, confirmations, settlement and reconciliation.

Elliott said the idea had worked in Europe and Citigroup had talked to two of the four big banks in Australia.

Finsec's Andrew Casidy said it was too early to say if the plan would hit jobs and it was unlikely to affect his union's membership. One banker said outsourcing back office functions was most likely to work if a separate vehicle was set up to ensure confidentiality of information.

Elliott, a New Zealander, is moving to Hong Kong to head Citigroup's transaction business in 15 countries.

Citigroup targets multinationals, large local companies with foreign businesses and corporate business.

It has no retail branches in New Zealand compared with an average of 183 among the main banks. It has about 3 per cent of the corporate banking market against the big encumbents' 80 per cent.

He said because of the stiff competition, New Zealand corporates raised funds at between 10 basis points and 20 basis points cheaper than companies with similar credit ratings in Australia.

Citigroup is putting its investment bank Salomon Smith Barney and corporate business together, leaving consumer business under the Citibank brand.