Citi Ja at 59 looking to grow loans, profit
Citibank NA has long transformed its global operations into a lean, mean machine and its Jamaica business, headed for the past two year by career banker Eva Lewis, is not venturing outside the worldwide business model.
Still, the American bank, which has operated in Jamaica for the past 59 years, is looking to grow its business , largely by expanding its risk management services to its core big clients and expanding its relatively small local currency lending portfolio.
Citi, with operations in 98 countries, remains very active in US dollar lending to private institutions and governments although, in an interview with Financial Gleaner, Lewis declined to put numbers to the Jamaican bank’s local and foreign currency portfolios.
Citi’s decision to grow Jamaican dollar lending has been spurred by what Lewis describes as the “drastic decline in local lending rates” with more of its large global clients with businesses in Jamaica switching from US-dollar borrowing to local currency borrowing as a liability-management strategy.
Noting that the Jamaican economy has improved significantly in recent years, with greater stability and massive amounts of liquidity in the system being among its high points, the better macro environment has created challenges for Citi in terms of heightened competition, compressed spreads and fees, which Lewis describes as “a natural consequence of a more stable market.”
The Citi response is to differentiate, innovate and push the envelope, creating new spaces to engage its clients.
“My challenge has been basically how to respond to a very good macroeconomic environment,” says Lewis, who, this month, marks 32 years with Citibank Jamaica. She started with the bank as a management associate straight out of graduate school at Temple University in the United States, where she pursued an MBA.
The Citibank Jamaica country officer, who led the bank’s corporate banking portfolio for some time, agrees that Citi has a traditionally prudent, conservative and centralised decision-making culture, with little room for major business model deviation based on local economic peculiarities in countries where it operates.
“We do have the ability to present opportunities whether it be for lending or the introduction of new products that are appropriate, because the environment provides an opportunity,” she notes, however.
High rates of return
The Citi Jamaica head says her bank is not focussed on big top-line growth. Rather, it is focused on ensuring high rates of return for its ultimate shareholders and wringing greater efficiencies from its operations, even with moderate gross revenues. Differentiation, for Citi, has involved brand distinction in cybersecurity thought leadership globally, and Lewis, from day one, identified this area as being central to driving greater efficiency and profits. Digitisation, automation and streamlining process are as central to its internal operations as they are to client business solutions, the Citi Jamaica top officer says.
Accepting that cybersecurity is a huge problem locally, Lewis says that while Citi Jamaica has not had that experience, it does not mean that the bank’s operations elsewhere have been totally spared.
Citibank is leading a Commonwealth cybersecurity initiative, in collaboration with the British government, to raise awareness about the issue, and share the bank’s experience and expertise in the area.
In Jamaica, Lewis says she and Citi will be playing a lead role within the Jamaica Bankers Association to equip local financial institutions and users of banking services with a cyber fraud response playbook.
Earlier this month, Citi launched its digital banking platform CitiDirect BE Mobile for institutional clients in some 18 Latin America markets, including Jamaica and several Caribbean countries. With the new technology, Citi’s institutional clients can now use fingerprint or facial recognition to securely access bank services on mobile devices.
The platform provides a single point of access for institutional clients to Citi’s full range of global cash, trade, liquidity and investment services.
Citibank Jamaica is a branch of Citibank NA, headquartered in New York. The bank’s global operations are carried out on two main tracks – the consumer bank operating in North America, in Mexico under and Banamex brand, and in Asia; and the institutional client group, the ICG, with divisional leadership spread among New York, Miami and Bogotá, Colombia.
Lewis notes that Citi has made some dramatic decisions over the past five years about where the consumer bank operates, which included divesting itself of consumer banking operations in South America and Central America.
Jamaica is part of the Latin American region of the ICG. The 1980s Latin American debt crisis and tight economic conditions in Jamaica led to the decision to restructure the bank’s local operations with the closure of eight retail branches and a new focus on corporate banking.
Back-offices operations, including processing and human resource management, are located in Citi hubs around the world in places such as Tampa in Florida, Costa Rica, and Mumbai in India.
This centralisation of operational functions in offsite service centres has continued over the past two years, resulting in contracting staff numbers in Jamaica, for example, to 53 from 78 when the bank relocated from the bustling Knutsford Boulevard, the main promenade of the New Kingston business district, to the more suburban Hillcrest Avenue area of the capital city.
“This is consistent with the shared services concept that many large corporations are adopting in a drive for greater efficiency,” Lewis maintains.
Citibank Jamaica is the smallest of eight banks in Jamaica’s commercial banking markets. Its loan book in March was valued at $2.76 billion, and its assets at $25 billion, according to industry data published by the central bank. Comparatively, the commercial banking sector is valued at $1.54 trillion by assets.
Noting that its smaller physical size is not reflective of profitability or signal of a retreat from the Jamaican market, Lewis points out that in 2017 she took over from former Citibank head Peter Moses, management of a Jamaica franchise that was well-run and very profitable, but which was at the beginning of a huge shift in Jamaica’s macroeconomic environment.
From then, the global business model has concentrated on front-office client interface and offering customised banking solutions to its clientele of mainly big businesses.
As to why Citi maintains a brick and mortar operation in Jamaica while doing business remotely in some other Caribbean jurisdictions, Lewis said it’s all about relationship building.
“Despite the advances in technology, what really counts is client relationships. We need to be with our clients on a continual face-to-face basis in order to serve them appropriately. That is the one thing I believe should not be done virtually. We have a strong banking and product sales team on the ground, which is key to effective relationship management. We are committed to Jamaica, to supporting its growth and to the development of the nation,” she said.
Global client corporations
Citi’s Jamaica client list comprises subsidiaries of global client corporations which do business in Jamaica, large Jamaican corporations, financial institutions for which Citi provides international correspondent banking and other services, and the Jamaican Government, for which Citi undertakes large scale local and international capital-raising and other big financial transactions.
The bank played a major advisory role in the Government’s big debt restructuring deals – the Jamaica Debt Exchange of 2010 and the National Debt Exchange of 2013.
Citi Jamaica offers services in three main categories – banking, treasury or markers, and trade and transactions solutions. Banking consists of core lending, advisory services and capital markets. Its treasury products include foreign exchange products, hedging solutions and structured investment and financing solutions.
“I believe we can expand our client base as the economy grows, provide significant support to our financial institution clients, help develop the local derivatives market – which we are already doing, and continue to expose our clients to innovative products that support their businesses end-to-end,” Lewis said.