Citi’s Asia trade and treasury chief eyes growth

The bank’s new head of Treasury and Trade Solutions for Asia-Pacific, Sridhar Kanthadai, says he is seeing a flurry of requests for proposals as Asian businesses seek to centralize costs. He talks about his new role, his priorities and his outlook for 2010.

  • 10 Mar 2010
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Sridhar Kanthadai has inherited a mouth-watering challenge: take an award-winning business and increase its dominance in an environment of rising competition.

Named Citi’s regional head of Treasury and Trade Solutions (TTS) for Asia-Pacific last month, he has slotted into a vacancy that was as much a surprise to the market as perhaps to Kanthadai himself.

He succeeded the industry-respected Ivo Distelbrink, who had been with the US bank for more than 15 years but quit before Christmas to join Bank of America-Merrill Lynch as managing director and Asia head of Global Treasury Services.

Presumably the prospect of building a business at BoA-Merrill was too much of a draw for Distelbrink. Now it falls on Kanthadai’s shoulders to keep Citi top of the pile.

Still, at least he can approach his task from a position of strength. The US bank dominated Asiamoney’s largest ever Cash Management Poll last year, being voted preferred global cash management provider among corporates and financial institutions across Asia-Pacific (see story).

It was voted top by small, medium and large corporates in the region and crowned number one for small and medium financial institutions, too. Its only blemish was in the large financial institutions category, where Deutsche Bank came top and J.P. Morgan finished second, ahead of Citi in third.

But overall the result was again a ringing endorsement of Citi’s expertise in this area. Given its strength in depth, the real question is not whether Kanthadai is able to fill his predecessor’s shoes, but whether he can take the business on to the next level.

The fact that he did not have time to organise new business cards and handed one with his previous title of chief operating officer on was not the most auspicious of starts.

Yet while it might point to the rushed nature of his appointment, it also indicates a level of comfort in taking the interview. For Kanthadai is no rookie. He points out that he has been with Citi for 18 years dealing with treasury, custody, trade and cash management.

“Before my role as chief operating officer, I ran all the liquidity business for cash management as well as the receivables business,” he said. “I also ran all the electronics channels that we used to communicate with clients. I am intimately familiar with the businesses, the products and the people.”

Riding out a storm
Two years ago Citi was undergoing something of an identity crisis. Exposure to sub-prime debt and ailing business lines had driven the bank to the brink, to the point that it is now 27% owned by the US government.

At that time it opted to combine its cash management and payments businesses to form Treasury and Trade Solutions, which targets corporates and financial institutions.

“What we found is that the client needs are not dramatically different in these two areas,” explained Kanthadai. “Cash management is about payment, receivables and [managing] liquidity.

“But trade in effect creates the same thing. It involves a commercial transaction. The only difference is that there is a risk mitigation component and a financing component that is intrinsic to that transaction.”

The credit crisis of 2007/08 fundamentally changed the game. Where businesses had felt comfortable about taking commercial risk, the need for greater intermediation quickly became apparent, noted Kanthadai.

“From a client standpoint it does not really matter that one is called trade and one is called cash management. So two years ago we made a decision to combine these organisations. We have consolidated the teams that service, that sell and that manage these businesses across all our 18 countries.”

Kanthadai rejects the suggestion that this was simply a way of streamlining a business at a time when Citi was frantic to claw back costs.

“On the contrary, we increased our headcount because we saw new opportunities with clients. By bringing these teams together and forcing in some manner an improvement in [staff] education and understanding, I think we are better placed to serve clients holistically.

“Our business has grown significantly on the trade side, especially because we now have more depth and a much broader capability across spectrum.”

Business performance
Global Transaction Services (GTS), which encompasses both TTS and Securities and Fund Services that target investor clients, is very firmly at the heart of Citi’s culture.

Following its humiliating state bail-out, the bank is in the process winding down Citi Holdings, a collection of non-core businesses it acquired or built over time, and growing Citi Corp., which includes its transaction services business.

More specifically, Citi CEO Vikram Pandit has set the goal that its services business should at some point make up one third of the company, from 12% at present.

Last year GTS reported net revenues of US$9.8 billion globally, a 2% year-on-year decline. It came against total Citi revenues of US$80.28 billion for the year.

In Asia-Pacific, GTS reported revenues of over US$2.5 billion, meaning that the region accounts for about 25% of the business globally.

“It is a business that has grown very well for us,” stated Kanthadai. “We have focused on it enormously, especially in Asia. And I am delighted to take ownership and stewardship for this business here in Asia now.”

In terms of compound annual growth rate, Kanthadai says that GTS has grown not far shy of 30% since its inception in 2003.

He puts this down to a combination of things: a relatively benign economic environment, including strong Asia GDP growth; a proliferation of free trade agreements; and customer acquisitions by Citi.

He notes that clients are increasingly looking to rationalize their structure by moving from a multitude of banking partners to either one or just a few, and that Citi has benefited as a result.

“These are driven by the needs [of clients] to have more operational efficiency, more control and more visibility of their flows. If you have a multitude of banking partners for whatever historical reasons, efficiency is compromised.”

Kanthadai also notes that Citi experienced 27% growth in its deposit base last year. “If you think about all the troubles you have read about, you might have assumed the worst for an organistaion like Citi,” he said.

“But the fact that companies have increased their deposit base with us is a great example of how they have trusted our ability to survive, as well as the solutions we offer.”

Then again, the implicit guarantee of government support can’t have harmed either, effectively making Citi the ultimate safe-play in terms of counterparty risk.

People power
Cost management has been a major consideration for most companies over the past year, slowing down decision-making on things such as moving banking partners. But that, says Kanthadai, is changing.

“I think from the last quarter of last year we have seen renewed interest in decision-making, the whole centralization theme has played well with many clients. There has been a flurry of Requests For Proposals [RFPs, an invitation for suppliers to submit a proposal on a specific service] from large Asian companies as well as multinationals.

“I think we are in a great position from a driver standpoint. We have got customers who have trusted us with their deposits. We have got great solutions out there, the RFPs are flowing in. I think some of the winds we have had in the last 90 days are amazing.

“It is a good reflection that clients are back in business and making decisions, and that we are very well placed to support them in their aspirations. So we feel very good about 2010.”

Asked about growth targets, Kanthadai says he is aiming for revenue growth of 14% for the TTS team in Asia.

“That is a good, healthy double digit number. It is not the same as historic growth targets [of high 20s], but it is a realization that the markets will take some time to normalise. 2010 will be a good year of growth, but not spectacular.”

Overall TTS has more than 1,000 people in Asia. Kanthadai adds: “We have got people in every market that we service clients, so it is really feet on street as opposed to just regional hubs.

“As we do lose people sometimes to other firms, we will replace them and we will grow our headcount selectively in the first quarter.”

He suggests the business will raise its headcount by a high single digit percentage this year, also noting that Citi has made a significant number of promotions to managing director and director in Asia last year.

“We have got a great talent base, and it is obviously a magnet for our competition,” he confirmed. “They will pick and choose, but we are committed to investing in and retaining our staff.

“This is a people business. We have always developed a lot of talent and we will continue to add to our bench strength.”

Citi successes
Over the past two years, Kanthadai notes that Citi’s export agency finance business, through which it helps to facilitate international trade, has seen increased activity.

He also points out that the firm has aspirations of building its supply-chain business, working with clients towards an end-to-end solution rather than just dealing with individual transactions.

Plus he notes that Citi has also scored in the public sector, providing card services to government agencies including in Hong Kong and Singapore.

In terms of growth markets, Kanthadai says Citi has a five-country strategy for Asia, namely Japan, South Korea, India, China and Hong Kong. “We think these five countries are where we can really up the ante as part of our overall TTS and GTS growth strategy.

“We will think of ways to maximize our existing footprint and client penetration in these countries. But for us it is not just about domestic businesses in these countries. It is also about companies that are headquartered there and serving their needs across the network.

“I think that is the growth story. These are going to be focused countries for TTS and for the rest of the bank as well.”

He sees large local companies in Asia as a big growth area for the bank. “They are actually acquiring manufacturing or other facilities overseas, so we will help them on the M&A side, but more importantly from my perspective on the treasury side as they integrate their operations across different parts of the world.”

For Kanthadai, the next few years will prove instructive as he strives to expand Citi’s regional transaction services business. Citi must hope that the challenge proves absorbing enough that his eyes are not turned by rival banks as they continue to play catch up.

  • 10 Mar 2010

Bookrunners of International Emerging Market DCM

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 17 Oct 2016
1 Citi 38,857.97 184 9.39%
2 HSBC 38,447.58 227 9.29%
3 JPMorgan 34,744.34 142 8.40%
4 Bank of America Merrill Lynch 28,556.15 119 6.90%
5 Deutsche Bank 18,270.77 72 4.42%

Bookrunners of LatAm Emerging Market DCM

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 18 Oct 2016
1 JPMorgan 13,268.07 33 6.30%
2 Bank of America Merrill Lynch 11,627.56 29 5.52%
3 Citi 11,610.06 30 5.52%
4 HSBC 10,091.34 29 4.79%
5 Santander 9,533.17 25 4.53%

Bookrunners of CEEMEA International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 18 Oct 2016
1 Citi 13,617.40 57 11.05%
2 JPMorgan 12,607.77 55 10.23%
3 HSBC 9,327.72 50 7.57%
4 Barclays 8,643.78 30 7.02%
5 Bank of America Merrill Lynch 6,561.15 18 5.32%

EMEA M&A Revenue

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 02 May 2016
1 JPMorgan 195.08 50 10.55%
2 Goldman Sachs 162.26 37 8.77%
3 Morgan Stanley 141.22 46 7.64%
4 Bank of America Merrill Lynch 114.20 33 6.18%
5 Citi 95.36 35 5.16%

Bookrunners of Central and Eastern Europe: Loans

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 18 Oct 2016
1 UniCredit 3,966.12 27 13.01%
2 SG Corporate & Investment Banking 2,805.90 16 9.20%
3 ING 2,549.27 20 8.36%
4 Citi 2,526.98 15 8.29%
5 HSBC 1,663.71 16 5.46%

Bookrunners of India DCM

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 19 Oct 2016
1 AXIS Bank 5,944.45 123 18.53%
2 HDFC Bank 3,792.05 100 11.82%
3 Trust Investment Advisors 3,390.86 145 10.57%
4 Standard Chartered Bank 2,299.63 31 7.17%
5 ICICI Bank 1,894.86 51 5.91%