Citi defies coronavirus with Western European corporate lending push

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LONDON (Reuters) – Citigroup (N:C) is looking to ramp up its commercial banking operations across Europe, Middle East and Africa, plugging gaps left by rivals facing fallout from a coronavirus-induced recession.

The U.S. bank plans to expand its business lending division catering to companies with annual turnover between $25 million and $2.5 billion with a slew of new hires and office launches in several Western European countries by the end of 2020.

Competitors, including HSBC (L:HSBA) and Standard Chartered (L:STAN), have made similar bids to win business from small and mid-sized European companies in the past few years, hoping to increase revenues in a market traditionally dominated by local banks.

“If you look at European banks right now, many are refocusing as national champions, selling off or reducing marginal overseas businesses where they didn’t have scale,” said Ray Gatcliffe, Head of Citi Commercial Bank for Europe, Middle East and Africa (EMEA).

The time is right to expand despite fears of credit losses caused by the pandemic, Gatcliffe said, as rivals pare lending to smaller, fast-growing companies which find they need a global bank when liquidity is being used up by domestic or blue chip clients.

While Citi as a whole operates in 55 countries in EMEA, its commercial banking unit – which has around 5,000 clients in the region – only has offices in 15 with another 21 countries served from hubs such as Dublin, Dubai and London.

The 15 offices are predominantly in central and eastern Europe including Poland, Turkey and Russia.

Gatcliffe declined to specify where Citi will expand first but said he wanted to add to the unit’s 500-strong EMEA team with a minimum of 10-20 hires for each new office.

“A lot of companies in EMEA have been impacted by their banks reducing global and even regional footprints. We’ve kept our global network and think that will resonate with clients seeking to expand internationally,” Gatcliffe said.

“It’s not an inexpensive proposition to have local banking licences across the globe as we do. There are important opportunities and obligations attached to having such a broad geographical footprint.”

The launch of Citi’s UK commercial banking business in 2017 has also provided a blueprint for expansion elsewhere, he added. Last year, that business contributed 21% of EMEA revenues.

Citi is particularly targeting fintech companies which often require cross-border services.

In 2019, the bank expanded its Digital Client business to 16 Western European markets including Germany, Spain and the Nordics. 

These markets are currently served by digital hubs in London, Dublin and Tel Aviv.