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| Citi rules out selling stakes in Indian, Chinese banks: Report |
| Press Trust Of India / London May 28, 2009, 23:38 IST |
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Troubled financial services firm Citigroup, which was bailed out by the US government last year, has ruled out selling its stakes in Indian and Chinese banks, says a media report.
In an interview, Citigroup’s Asia-Pacific region Chief Executive Officer Ajay Banga ruled out selling the US group’s stakes in Chinese and Indian banks. He also said the bank, which was rescued by the US last year, also planned to expand lending across the region in spite of the “challenging” economic environment.
The Asia-Pacific region, which for Citi includes Japan and Australia, accounted for 30 per cent of the bank’s revenues last year, spanning corporate and consumer lending, credit cards, trading and private banking, the report said.
“It is in US taxpayers’ best interests that we continue to grow in a region which is delivering strong profits across all its business lines,” Banga said.
The interview report said his comments would serve as a counter to sceptics who believe that Citi would be forced to cut down on its Asian operations amid domestic political pressure to focus on lending to US clients.
A stress test by the US government later found that Citi still required a further $5.5 billion in capital to guard against losses if the recession worsened. This has prompted speculation that the bank could be forced to follow some of its western rivals and raise cash by selling lucrative stakes in Chinese and Indian banks, the report said.
Citi is the leading shareholder in India’s HDFC and Banga pledged that Citi would keep its stake in HDFC, which he described as among India’s “best run financial institutions”.
Besides, Citi also owns a 20 per cent stake in Chinese Guangdong Development Bank and a 3.75 per cent stake in Shanghai Pudong Development Bank.
“Selling our stakes in Chinese banks does not make sense either. How else would we gain access to the opportunities in an area such as the Pearl river delta?” Banga elaborated.
However, the report stated that this month, Citi sold its Japanese domestic securities business to Sumitomo Mitsui Financial Group in a $7.8 billion deal that helped bolster its battered balance sheet.
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