Citigroup Inc plans to expand its business in central and eastern Europe even as the No. 2 US bank scrambles to contain mounting debt losses globally, its regional chief executive said on Thursday.
Shirish Apte, the head of Citi’s operation in CEE, said the region should weather the slowdown better than western economies as it has largely avoided the borrowing excesses that sparked the current financial crisis. He also said Citi’s cautious approach to lending in countries such as Poland, Hungary and the Czech Republic has given it a relatively good position from which to expand, although this may not necessarily require acquisitions.
“We see central Europe as a growth market where we already have a strong presence,” Apte told Reuters in an interview. “Our idea is to continue investments in this market and grow our business.”
Citi has announced plans to cut more than 50,000 jobs globally after the group made more writedowns than any other bank during the global financial crisis. The group also received a massive bailout with the US government agreeing to shoulder most losses on about $306 billion of the bank’s risky assets, and inject new capital.
Earlier this month, Citi agreed to sell its German arm for $6.7 billion to French mutual bank CM-CIC as part of its drive to sell hundreds of billions of dollars-worth of assets. Apte on Monday denied speculation that the US financial group was planning to sell its Polish unit and the country’s sixth largest lender Bank Handlowy with some $13 billion in assets.
“We’ve built up a very significant position with Bank Handlowy,” he said in an interview. “Notwithstanding what will happen in 2009, and everybody will do worse than they did in 2008, in relative terms countries like Poland will be fine.”
Apte acknowledged it was difficult to predict what the next year would bring for central and eastern Europe. But he said the pent-up demand in areas such as housing as well as the lack of excessive borrowing should ensure the region would emerge from the downturn in a relatively better shape. “We are looking at how we can strengthen our position and one of the good things of going so strongly into the market such as this is that you are well-positioned to move when opportunities come up,” he added.
Apte also said the number of employees in Citi’s Handlowy unit would remain relatively stable, although he would not rule out moving jobs around its different businesses in the country. “We have a few processing centers in Poland and now with real estate prices coming down the country is becoming even more attractive for that,” he added. (Reuters)