Citibank Targets Nbfcs To Increase Asset Base

Citibank is targeting the non-banking finance companies (NBFCs) to grow its asset base. Over the last one year, it has picked up around Rs 800 crore of loan portfolios of NBFCs. The bank has picked up these loans in a bid to increase its assets in the small and medium enterprises (SMEs).

Sanjay Nayar, managing director (area head for India, Sri Lanka, Bangladesh and Nepal), global corporate and investment banking, Citibank, said the bank was open to picking up portfolios in the middle market and top tier corporate segment.

The bank has been increasing its focus on the middle market segment over the last three years.

However, with most of the banks focusing on this segment, the competition has increased and the spread is under pressure. Also, in times of recession this is the segment that would be most affected, thus increasing banks non-performing assets (NPAs).

"We focus only on some key vertical segments in the SME sector. We choose a particular industry and understand the whole chain from suppliers, manufacturers, dealers and end-customers. We understand the flow and the risk, and choose the segments where our bank is the dominant player," said Nayar.

The bulk of the SME is in the transportation business. Citibank has become the third-largest truck financiers in the country in three-and-a-half years. The other segments which the bank is focusing is in exports and branded consumer goods.

"Depending on the relationship with the clients we get a decent spread," Nayar said.

He was the global sales head for fixed income, emerging markets, in Salomon Smith Barney (SSB) in New York. This could be one of the reasons that he is planning to rope in SSB's local operations to offer a common face to the Indian customers. SSB is into cross-border merger and acquisitions and equity markets, while Citibank focuses on the local market.

"The idea is to present a common face to our customers. Our clients and markets should not see us separately," Nayar said, clarifying that the bank was not looking at merging the operations of SSB into Citibank.

On the changes in the domestic market in the last eight years when he was abroad, Nayar said: "The market has changed a lot both as far as competition and product range are concerned. Some of the significant new players in the market are HDFC Bank, ICICI Bank and StanChart. There has also been a lot more mergers and acquisitions. We have also seen the emergence of DSP Merrill Lynch, J M Morgan Stanley and Kotak Mahindra."

The bank is looking at providing a complete suite of products. "In the corporate and investment banking sector, we provide the entire range of debt products, asset-backed business, securitisation, export credit-backed business. The bank has knowledge in some of the key sectors such as power, oil and gas, branded consumer goods, media and telecom, pharma, cement and auto business," Nayar said.

He is also interested in opening a new market for corporate bonds. "We should start getting lower credit-rated companies. Also the concept of 'credit spread trading' needs to be developed," Nayar said.