Fortunate to be part in India's growth story


On 1 February, Mark T. Robinson, a 24-year Citi veteran, took over the reins of Citibank NA's Indian unit from Sanjay Nayar, who left for private equity fund KKR India Advisors Pvt Ltd. Shuttling between Mumbai and Delhi, the first foreign-origin chief executive officer of Citi South Asia in nine years, Robinson seems be enjoying his stint.

In an interview with Mint, Robinson talks about the future of consumer banking and Citibank's India plans. Edited excerpts: How has your experience been in India?
I was in Russia when I got a call from Ajay Banga, then chief executive officer of Citi Asia Pacific, and came to India on 26 November (in 2008). Sanjay (Nayar) was the CEO until 31 January.

My experience has been very positive on different levels. I have been extremely fortunate to be working for Citibank, where we have got a very large and a 107-year-old business.
With that history come great relationships with leading corporates and small companies.
The relationships with leading companies run into multiple decades.

On the personal front, it has been a very positive experience. My wife and children have made many friends in a very short time. Indians would probably rank No. 1 in the world league in terms of entertaining. This aspect makes it easy to be a part of the society and meet people in a casual manner.

Have you fired people? What have you done differently from your predecessor, apart from spending 50% of your time in Delhi?
I have not come here to fire people or do something radical. First, I understood the business and gave people some understanding of what my background is. Let me also correct you that I am not spending 50% of time in Delhi.
I have offices in Mumbai and Delhi and I am where I need to be. However, on weekends I am with my family in Delhi.

I'm very lucky that our consumer business is based in Delhi and this helps me spend a lot of time with my family.
Also, we have to interact with the government and this takes me to Delhi at least once every week. Besides, we have some of our important corporate clients in Delhi.

Like any two people, Sanjay and I are different, but I would not like to focus on the differences. We all have the passion to run the business and deliver the best to our customers. How you go about it is different--it depends on what the priorities are.

I have inherited a sound strategy. We have got a wonderful business here and I did not come here and say I have to change this and do this differently. I came in with an approach to build on the business created. There was something which was well understood that there was a need to restructure and clean up our distress activities like consumer lending.

Have you rationalised workforce?
There has not been any organised retrenchment. There are a lot of people working for TCS (Tata Consultancy Services Ltd) and Wipro (Wipro Technologies Ltd), who solely work on Citi-related projects.
Citibank may have created employment for 35,000 people, directly and indirectly.

We have hired more people but there have been selective areas where we have let people go as well.

Are you happier to be operating out of India and not Europe?
I think as a banker it has been a unique experience (in the) last 12 months being in India compared with any other part of the world. The conditions in Western Europe deteriorated quite significantly compared to the conditions in India. In Russia, the economy would shrink by about 10% this year. I am fortunate to be a part of the Indian growth story.

How's India different from Russia?
The length of time that Citibank has been here certainly makes a lot of difference. We have been in Russia for about 17 years. The commercial environment is much younger there.

In India, we have developed a very broadbased activity, which only comes with time.
We have got very large relationships with TCS and Wipro to do all the back office services, which we can do only in India.

We have a large equity investment in India. We have a much more developed capital market in India and hence play a broader role in the equity and debt markets. India is quite unique in this respect.
These businesses are just evolving in Russia.

The consumer markets in the two countries are very different. The average Russian is more affluent compared with an average Indian.

What's the status of your consum er finance arm, CitiFinancial Con sumer Finance India Ltd (CitiFi nancial)?
The unsecured loan business was being done out of CitiFinancial. We are over the hump in terms of consumer losses and we would be at normalized levels by the third quarter of next year.

The second major part would be the credit card portfolio. We are still originating new credit cards and the credit losses are very high.

Abnormally high? About 20% or in their teens?
I don't want to specify. I think teens is a common industry average and we are also around that.

We are still working through those issues. We have tightened our origination criteria.
We have a card base of 2.5 million, of which 1.4 million cards are active.

Because you don't have annual fees on a large number of cards, they are sold as a free option and the usage level is very low as there are two to three cards in the consumers' pockets and they would not use it unless there is a good value proposition.

Credit performance in this segment is lagging behind, but by the end of next year we would reach the normal level.

The third part is the mortgages business. Here the credit performance is very strong.

We don't engage in auto loans. We also distribute investment products. That has been off in the last 12 months, but the business is coming back.

What's the future of CitiFinancial?
CitiFinancial is a part of Citi Holdings and any asset under Citi Holdings would be one for which we would want to realize some value over time. We could realize value from CitiFinancial through multiple options--an outright sale, a partnership or an IPO (initial public offering). CitiFinancial is an attractive business and has a great pool of talent. We have assets and about 2,000 people.
CitiFinancial has around 800 certified professionals authorised to sell insurance products, which is the highest compared with any financial institution or non-banking finance company.

When we bought down the network to 118 from 450, we selected the location in a way that fits the future needs.

However, they do not form a part of our core operations and hence they could be better off with somebody that sees value in them.

Can you independently take deci sions on CitiFinancial's fate in In dia?
There is not likely to be a single prospective buyer or partner for all of CitiFinancial operations. Our strategy will be country- or region-specific.
There's no global strategy and it would have to be countryspecific. It's an ongoing process. We are not working against some artificial deadline. Any investor with a real ability can come in and have access to this highly talented employees and network. What kind of growth in assets and profits do you see for this year?
We will see loan book shrinkage on the consumer side for the fiscal year ending 31 March, 2010, but for the calendar year 2010, we will be able to keep the consumer banking portfolio flat. We have a large commercial loan portfolio and we are budgeting a 20% growth there. We can see an upward trend on account of episodic financing--major companies embarking on major acquisitions or projects.

What are the most critical busi nesses in India?
We are very much a part of the flow of transactions, which we call the global transaction service that includes the cash and trade management and custody business. This is the key when it comes to contribution to global revenues. It accounts for almost one-third of our business in India. We provide these services to foreign institutional investors coming to India and corporates.

Year to date we are No. 1 in IPO financing and No. 2 player in the bond market. We are a very large player in the government securities market.

Are you also participating in the government's disinvestment pro gramme?
We are pitching very hard.
We played a role in the Oil India Ltd IPO. We are actively engaged with the government for similar such transactions.

Our capital market activities have strong connectivity with our global network. We can bring in international investors to these divestment programmes.

Indian transactions are quite large and if you wish to be a material player in the global ranking, you have to do well in India.

Our affluent banking business is yet another important business.

Any pocket of worry in India?
Banking is a complex business today. You have to be humble and there is not a single banker who doesn't think a lot more about risk today. I am very conscious of the fact that I am in a country which has averted the worst of the economic crisis the world has seen.

There is a feeling that foreign banks don't do much in India in terms of innovation and consum ers won't miss them if they are not there.

I haven't heard this before. I haven't heard of any country that has said we don't need to benefit from practices that seem to work in other markets.
Citibank has benefited from being in India in so many ways. We have been able to offer careers to so many different people who have become a part of senior management of other banks. Rana Talwar, Aditya Puri... I can name 20 people. I can't think of any other bank that has contributed to the export of talent.

I will give you a list of our top 100 customers and I would hope that they all would say that we have benefited from Citi's global experience. Increasingly, corporate clients are going into central Europe and we are possibly the only foreign bank in India that has a wide network in central Europe.

Financial institutions provide a backbone to international commerce and that may not be visible to everybody. We are very much a part of the process where Indian corporates connect to global clientele and consumers. International banks are a very important link through which India is linked to the rest of the globe.

Are you considering any structural change of moving from a branch model to a subsidiary?
There is no road map to becoming a subsidiary. We are comfortable operating as a branch.

Are you considering listing in India on the lines of what Standard Chartered Bank is doing?
What Standard Chartered is doing is listing the mother ship. I think it's an interesting move. They are a little bit different from Citi. Their Indian operations are a very significant part of their global operations and a local listing can bring them some intangible benefits.

Any plan to expand into rural In dia?
We are the largest international bank financier to microfinance institutions. We have almost $200 million of loans outstanding to these institutions. We are also the largest holder of no-frills accounts with about 15,000 accounts.
That's a drop in the bucket but this is our opportunity to learn how to provide basic banking service in a different cost model. At the same time, what we are doing is linking our community service initiative with the micro-finance institutions.

Recently, we opened a branch in Akola (Maharashtra), an under-banked area.

When it comes to foreign banks such as Citi, the Reserve Bank of India always talks about reciproci ty. The Indian central bank is not allowing Citi to open too many branches as US authorities are not liberal to Indian banks.

They use it very broadly with most foreign banks. If the country is going to benefit from international institutions, why hold the country hostage to such an approach?
Has the government support to your parent slowed down expan sion in India?
No. There has been no direct impact of moderating our business approach. What has impacted us is the business condition. At its core, the US tax payer is entitled to a return and the return depends on your growth in countries like India.