Hope to get buyer for consumer biz by Q4: Citi India CEO Ashu Khullar

Despite being a foreign bank, we move 7-10 per cent of the Indian payment systems, says CEO Khullar

In his first interview after the announcement of exiting the consumer banking business, ASHU KHULLAR, Citi India’s chief executive officer, tells Pavan Lall that the bank aims to double down on its institutional business, and that India’s story as a financial market remains strong. Edited excerpts:

What’s the status of the sale process of the consumer banking business? What does this strategy mean to your business in India? 

This was a strategic decision taken by the new leadership. What it really says is that we have to make some capital deployment and redeployment calls — areas where Citi is competitive globally in the long term. There’s a clear differentiation. In the institutional space, we have a 100 country network and it still needs the investment and has a high-return sustainable advantage. In India, the consumer business was increasingly becoming a domestic one, where global synergies didn’t fit in as well and were competing with well-funded local players. 

We are going to run an orderly sale process. This is not a fire sale. We will do it on our terms for the right value and for a buyer who will give a good home to all our clients and the 3,000 people who work for us. The sale process is under way. Hopefully by the fourth quarter, we would have an agreed counterparty. The completion of the entire process can easily take 12-18 months.

We are dominant players in the cash management and trade finance business. Despite being a foreign bank, we move 7-10 per cent of the Indian payment systems. We have leadership in equity capital markets and the investment banking business. We are in the process of coming out with a redefined strategy on our transaction services business. Being a big market, India will be a big recipient there. We don’t see any break-points for the institutional business, given the decision to sell the consumer business. 

How will you double down on the strategy on your institutional business? 

One aspect unique to India is the depth and breadth of our client base. We are the largest foreign exchange service provider for clients. Foreign capital either comes in as foreign direct investment or foreign portfolio investment — we are perfectly positioned with the suite of services offered, including digital technology (tech)-financial tech (fintech) partnerships. We are developing commercial real estate propositions and distributor trade finance, where we have made investments. India has short-term ups and downs. But few countries have its financial wherewithal. 

Last year was tough for business in India and worldwide. Will the results be depressed for the financial year ended 2021? 

It has no doubt been an extraordinary year. Our focus has been on clients and the community. In the early phase, they shored up liquidity and bolstered capital. This pandemic has turbocharged the digital way of doing business. In the end, the impact of activity wasn’t as bad as it was feared. The business performed resiliently, given the headwinds. You will see growth on both sides of the balance sheet. We were definitely a beneficiary of the fund-flow increase. While the overall credit and advance demands were muted at the macro level, we tried to see how we could best grow our loan book. You will likely see single-digit growth. Having been done with the digital journey, we have been net beneficiaries. We had our fintech partnerships and our tech pipes are full. 

Citi has always been a net hirer and exporter of top-drawer talent to other markets. Will the sale have an impact on that? 

India will always remain a key talent hub for Citi because of the quality of resources. The rotation of talent worldwide is not random; it’s an organised thought process. None of that will change — we have 23,000 employees and will end the year with 25,000. We have been adding 3,000 on average every year. This includes client solutions centres. I see the pace continuing and India will carry on being a place to hire for Citi.

Given the Covid-19 pandemic, how have your clients from middle market enterprises (MMEs) to Indian companies and multinationals adapted? Do you see India potentially emerging as a strong China+1 contender, given there is a new world order with supply chains and economies being created?

There was always a great opportunity for India because of diversification. This is now even more attributable to Covid-19 and the whole China+1 strategy. No one is going to leave China because it’s a large market. But I would say that the Government of India itself has been watchful of these opportunities — the tax and land reforms, the infrastructure push, and production-linked incentives have been notable. The game, however, for supply chains is long term. From that view, India has a great hand to play.

We, of course, have a lot of multinational target clients whom we talk to to try and see the India opportunity. We are naturally positioned because of our global network. In our customer base, if we start with the MMEs, we see textile players doing offline garment designing move fast to sophisticated software; fast food companies making the switch to home deliveries, and still others setting up personal protective equipment lines as new verticals. If you see the kind of transactions Reliance did and raised capital at the height of the pandemic, it never missed a beat. By and large, our client base has been very resilient; the smart people have been proactive in raising capital. 

Do you believe India will see more fundraising? 

Equity market activity, environmental, social and governance activity, special purpose acquisition company activity — the markets are on fire because the interest rates are attractive and the 10-year treasury bills are low to 1.3 per cent. The money is cheap and available in plenty. The whole liquidity game is very much alive. Everyone is expecting sharp recovery, despite the second wave. In India, for the first six months, there has already been $15 billion of equity-raising and as much in debt. We just saw strong response to the Zomato initial public offering. There are a number of consumer tech and health tech players who will contribute to the strong flow of companies going public. I am confident about the capital markets and the mergers and acquisitions.