Citigroup may invest $2b in Asia consumer banking

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HONG KONG, April 4 (Bloomberg): Citigroup Inc may invest as much as $2 billion in its Asian consumer banking unit in the next three years as the US lender overhauls branches and boosts service offerings to the region's growing middle class. Citigroup plans to invest $3 billion to $4 billion in its consumer operations, mainly in emerging markets, over the next two to three years, Manuel Medina-Mora, head of consumer banking for the Americas, said on March 24. About half of that amount will probably go to Asia, a person with knowledge of the matter said, declining to be identified as the breakdown isn't public. Citigroup, HSBC Holdings Plc (HSBA) and Standard Chartered Plc (STAN) are among global banks expanding in Asia, where economic growth and wealth creation are outpacing the US and Europe. The Asian consumer banking unit boosted income 52 per cent to $2.17 billion last year, making it Citigroup's second-biggest earner. "The opportunity is very significant," Jonathan Larsen, Citigroup's head of consumer banking for the Asia-Pacific region, said in an April 1 interview. "I think the broad trend will continue, i.e. the growth of the middle class, the increase in concentration of affluent, and the increase in growth of consumption." Larsen said Asia will get a "significant" portion of the planned consumer-banking investment worldwide. He declined to provide a specific amount. Asia accounted for 46 percent of Citigroup's consumer-banking income last year. The New York-based bank today announced measures to target what it calls Asia's "emerging affluent" people-those with net worth of $10,000 to $100,000. Its Citibank consumer unit caters to people with up to $150,000 of net worth. Clients with $150,000 to $1 million of net assets have access to the bank's Citigold programme. Asia has about 500 million people with net worth of $10,000 to $100,000, and financial-services revenue from that group is forecast to grow as much as 15 percent a year in most countries, Citigroup said in a press release today, citing estimates by Credit Suisse Group AG and McKinsey and Company. As part of the plan, Citigroup has expanded opening hours at branches in markets including Hong Kong, and will introduce round-the-clock phone banking service and convert more outlets to what it calls "smart branches" featuring teleconferencing equipment and staff using Apple Inc. (AAPL) iPads to display Citigroup's online services. "What we are trying to do is to re-engineer the customer experience," Larsen said. "We've tried to make it a much more interactive experience."