The former Bankers Trust man who now heads Citigroup Private Bank spoke about growth opportunities in Asia. Also answering questions were Deepak Sharma, Citi’s division executive, Asia Pacific and Kaven Leung, region head, Greater China.
Q: How do you see market conditions globally?
Scaturro: In the year 2000 we finished off what many consider a great bull market. During that time, lots of people looked very smart. What we’re seeing right now with more volatility in the market, are more interesting, complex markets developing. There is a flight to quality. Large families are looking for a private bank that has the staying power to deal with volatility and to guarantee them that the firm will be around in 20-30 years. In previous years it was easy to guess the markets right as they were all going up. Now we’re seeing families look for different opportunities. The flight to quality is happening now and Citigroup Private Bank is benefiting from it.
Q: Can you give us any idea about the growth in your Asian business?
Sharma: It was a very strong year. We grew our assets under management in Asia and our customer base by 25%. These are unprecedented numbers. Our franchise grew all across Asia.
Q: Do you have concerns about a slowdown in the US?
Scaturro: In all volatile markets there are opportunities. I don’t know another firm out there that has better investment acumen or global resources than Citigroup to find those opportunities. Citigroup has quality, stability and staying power and that’s the sort of thing families are looking for in conditions like these. With the equity markets, including the US, looking less attractive right now, we will be looking at alternative investment strategies. These will be the key to the next two years. These alternative investments are not necessarily correlated to the equity markets. We will offer the client the opportunity to co-invest with us. We will give them access to interesting investments such as in hedge funds and property.
Q: What percentage of Citigroup Private Bank does Asia represent?
Sharma: We have 50% of our assets in the US, and half is international. International comprises four regions: Japan, Asia, Latin America and Europe. We don’t break these out by market. But Asia is a very significant portion.
Scaturro: Let me say that last year the private bank had the most significant growth numbers in Asia, and we’ve hired a lot of personnel in Asia last year. That tells you how confident we are about Asia going forward.
Q: What are you doing in China?
Sharma: We opened an office in China two months ago and we are looking at the opportunities and how we can position ourselves for the future. So we are at an exploratory stage. But it will be an extremely interesting market for our franchise.
Leung: From our perspective, we would like to be an early player, so that we are ready when this market opens up. We believe this will be a big market for us in the next three to five years as China moves towards WTO accession. We are there now to explore what value we can add to the market. We believe we will have a first-mover advantage because we are preparing right now.
There is nobody in China today looking at the private banking market. We are the first onshore office to start to look at the feasability of operating private banking business.
We have been in the emerging markets a long time and one of our biggest priorities is that we are always, always within the legal and regulatory framework of what we can do in any country, including China.
