Building on a ‘Distinctive Combination’
Citi is a global bank; it’s hard to find a place where it doesn’t have a presence. But when David Livingstone, CEO for EMEA comes calling to Hungary, a relatively small market, he has two reasons to do so: the core banking business, here for almost 35 years, and one of just four service centers across the region. Here are excerpts from a wide-ranging and exclusive interview he gave to the Budapest Business Journal.
“When I think about Hungary, I think about our core banking business, which will have been operating here 35 years next year, as well our service center, which will have been here 15 years in 2020, and that’s a very good and distinctive combination,” explains David Livingstone, who took up the EMEA CEO’s role in February, having previously been country manager for Australia and New Zealand.
“Budapest is one of our four big service centers in the EMEA region, which is significant. My ‘why now’ [for visiting] is that I have been in the role for six months, I have been travelling extensively, but it is a very interesting time as we look at economic outlooks and the interest rate outlooks in different places in our region. We see places that are exhibiting economic growth, and have good economic conditions, so we can tilt our investment towards those places.”
Livingstone also makes the point that, in banking at least, size isn’t everything. “A country’s importance to Citi is not just about the scale of its GDP; it is about where clients are transacting, and where they are seeking out capabilities. You can’t just look at a network and say the most important places are the biggest places.”
When the Fidesz-led government returned to power in 2010 via a landslide victory, it was an enthusiastic user of so-called Robin Hood taxes to sure up holes in its budget, not least of which was the bank levy. Although it has been reduced, nine years later the tax is still in place. Is that a discouragement to Citi?
“Bank levies exist, to different degrees, around our region and the world, as do all elements of taxation. Against the bank levy, you have a corporate tax rate here in Hungary of 9%, which is very competitive as a tool for attracting international businesses. I think you need to balance that against all other costs of doing business in a country. We are happy the levy has been reduced, but we see it as part of the fabric of doing business in the country.”
Brexit and CSC
I wonder if Brexit, when and if it happens, might have an impact on the Citi Service Center in Budapest, with the migration of jobs to it from the United Kingdom. Livingstone makes it clear that the future of the CSC, which he says already has a “significant concentration of activities”, is much more dependent on its own success than any inheritance from elsewhere.
“Brexit will have very little to no impact on the decisions we have made historically or will continue to make about the real attractions of increasing our footprint here in Hungary,” the EMEA CEO insists.
“Those decisions have been made based on the benefits of the centralization of activities. Take our product control activities, which is where we manage the positions and the valuation of positions in our Markets business. Budapest is our global headquarters for that. So, it’s not just in the EMEA region. My previous role was in Australia, and some of our product control capabilities were done from Budapest.”
If not Brexit, then what might bring more roles to Budapest? “That is around the availability of talent, concentration of activities in centers of excellence and how can you add to that? We have built the base and have 2,000 employees in our CSC here in Budapest, so it is now at the level of maturity where it can advertise its capabilities to the rest of the Citi network.”
Interestingly, Livingstone, who is based in London (although, as he says with a laugh, he isn’t there that often at present) does not think Brexit will greatly diminish the importance of the U.K. capital, even if it loses its financial passporting rights once Brexit does happen. Indeed, he thinks it “will remain an incredibly vigorous, vibrant and global center”. Why?
“Rule of law, the incredibly deep experience, not just in banking but in all the associated sectors which service banking, labor flexibility, and its unique time zone position. And then there’s access to talent, and not just British talent but global talent. Now, you could argue that there are other cities, not too far away, but if you put that whole package together, it is very hard to see another city replicating that. And it is also the scale.”
Attraction and Retention
Mention of talent leads inevitably to the worry of so many in business in Hungary today: the nationwide labor shortage. Is Livingstone concerned?
“I wouldn’t call it a concern, but we recognize that the characteristics in the environment that we find attractive also make it attractive to a number of global organizations, and those organizations that are building capabilities here continue to grow.”
What that does mean is that Citi has to work hard in a couple of areas, he says.
“One is making sure that people see the attraction of a career in Citi. One of the things that is much more present here in Budapest now, even perhaps than two years ago, is people moving from one specialist activity to another within Citi, which is really positive from a career mobility point of view. If you think about career development, employee retention, skill development, that is a real positive and, in fact, I think the management team here is doing an excellent job of making that conscious and promoting it.”
The second area, he says, is employers needing to engage more with school and university students, and universities themselves, “to make sure that they demystify their organizations, but also to communicate what are the skills that we need. Counter-intuitively, as the world digitizes and automates more, everyone says, ‘Ah, that must mean you need more people who code’. There is part of that – you need people who are technically capable in IT – but you also need, particularly in financial services, people with more arts and humanities backgrounds, because you need to humanize the processes and the activities.”
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