Citibank, one of the dominant foreign banks in the Gulf, is preparing for more competition from local banks by deepening its presence in the region and expanding its branch network.
The US bank has applied for a banking licence in Qatar and for permission to open a branch in the Jebel Ali free zone in Dubai.
It is also looking at possibilities in Yemen.
Citibank returned to Lebanon this year, opening an office in Beirut in February. It has just launched an Islamic investment banking subsidiary with a separate capital base in Bahrain, which aims to have offices in Abu Dhabi and Malaysia in the near future (MEED 19:7:96).
‘Our strategy is to become more embedded in the markets we are in,’ the US bank’s regional director for the Gulf and the Levant, Mohammed al-Shroogi, told MEED on 23 July. ‘You participate in the economy, in the community. The aim is to be seen to be as local as a local bank.’
The bank’s current policy is only to open wholly-owned subsidiaries rather than to look for local partners, though it has a Saudi affiliate, Saudi American Bank (Samba).
‘There are areas where we used to be and we want to go back,’ Shroogi says. ‘Whenever regulation permits we’d like to be in Kuwait, either through the Islamic bank or the conventional bank.’ The Kuwaiti market is currently closed to foreign banks.
The application to open the Jebel Ali branch, which would focus on trade and corporate finance, is currently with the UAE central bank. Citibank already has five branches in the UAE, where foreign banks are allowed a maximum of eight.
Citibank, which has been in the Arab world for four decades, is active in trade, corporate and project finance in the Gulf.
Its most recent mandate was to leadmanage a tranche of financing for aircraft purchases by Dubai’s Emirates airline (MEED 31:5:96).
Shroogi sees growing competition from the region itself. ‘We see growth in these areas of corporate and project finance.
Nonetheless, local and regional banks are building their experience and adding staff. I think that in three or four or five years they will become head-to-head competitors.’
Retail lending is another area where the bank has been aggressively building its business and introducing new products.
In the Gulf, Citibank has retail business in the UAE, Bahrain and Oman as well as exposure to the Saudi market through Samba.
‘It (the Gulf) is a good market. Business units are shifting from government to retailrelated activity. We are positioning ourselves for that and bringing in new technology,’ says Shroogi.