Citi is Brazil’s ninth-largest bank by assets and the second-largest foreign one, but has outlined a plan to speed up in the country. The bank led by Marcelo Marangon has set the goal of expanding revenue by 50% in three years. To do so, it will invest more than $50 million in technology and hire 300 people – the bank now employs 1,900 people here.

Citi has also hired Fernando Iunes, a former Itaú BBA executive, as vice-chair of its investment bank. Mr. Iunes will strengthen a business in which Citi plans to advance, and foresees a very positive performance this year despite the fewer IPOs expected. Last year, the U.S.-based bank institution ranked sixth in revenue of investment banks in Brazil, according to Dealogic.

“Brazil is Citi’s seventh-largest market in wholesale banking, and we have a footprint in 95 countries. We have a growth ambition like we have never had, even in a challenging scenario, with elections, war, the transformation of the financial market, several factors,” Mr. Marangon said.

In moments of global crisis, the value of the bank’s global presence becomes even clearer, he said.

The bank has not yet released its official results for 2021, but the CEO says – without elaborating – that the profit was the highest in 10 years. The assets reached R$130 billion, up almost 30% year over year. He recalled that after the sale of the retail operation to Itaú, unveiled in 2016, the bank increased threefold its assets in the country and improved profitability. “This shows that the focus on wholesale banking made perfect sense.”

Better known for serving multinationals and large groups, Citi has decided in recent years to advance in the corporate segment, which includes companies with revenues from R$250 million to R$5 billion. This base has 1,200 clients, and the goal is to attract 1,000 companies more.

The expansion, however, does not represent greater risk taking. “We are going to increase our share of wallet and bring in new clients within the target market that has already been defined. We will not add unnecessary risk to our portfolio.” The bank’s total portfolio exceeded R$36 billion in the middle of 2021.

According to the executive, the scope has not changed, but the bank wants to attract a larger portion of a group that it estimates to have between 3,500 and 5,000 companies. He said that credit provisions dropped substantially in 2021 and does not anticipate a significant increase this year. “We are not changing the established prerequisites. And this is key for achieving resilient results,” he said.

Of the $ 50 million in planned investments in technology, a good part will be destined to cash management and treasury to improve services. Later on, the bank does not rule out using this structure to prospect smaller companies as well.

The immediate scenario is not easy, with rising inflation and interest rates, a sluggish economy, and the volatility of an election year. However, the bank sees opportunities in the country. “Despite the pandemic, the difficulties we have seen in the global supply chain and now the war, we see a positive outlook for Brazilian companies,” Mr. Iunes said.

The executive’s mission will be to strengthen the relationship with companies to capture these opportunities. With a tougher market, Citi is betting on infrastructure projects, many of them linked to recent concessions and the sanitation sector. “There is still the migration to a new low-carbon economy and we need to continue supporting clients in this regard, regardless of the macro scenario,” Mr. Iunes said.

This year, Citi took part in key secondary offerings, such as those of meatpacker BRF, power company Equatorial, Havaianas flip-flop maker Alpargatas, and the block trade of NotreDame Intermédica. Last year was already a record year for the bank, with 26 equity operations, 15 mergers and acquisitions and 46 debt issues.

Mr. Marangon acknowledged that the number of share offerings in the market as a whole is likely to be lower this year, but says that Citi wants to continue gaining market share. In addition, the number of M&A deals is expected to rise. “Obviously, there will be some slowdown, but they will continue to happen. We have a very large pipeline of deals. The long-term trend remains very positive,” Mr. Iunes said.

At the same time, Citi also expects to increase twofold, in three years, the $10 billion under management in private banking.

The elections this year pose challenges. However, according to Mr. Marangon, more important than the candidate who leads the polls is the vision about fiscal responsibility. “If we have a campaign that focuses on Brazil’s strategic plan, on the fiscal situation, on investments, we see no reason for it to avoid, postpone any type of investment, under the microeconomic standpoint. The macro is more complex.”

On the other hand, the executives’ view is that the war in Ukraine may increase the relative importance of Latin America in the portfolios of global investors. Mr. Iunes says that, besides commodities, some countries in the region, such as Brazil, have better governance standards.

With this, Citi sees the flow of foreign capital coming into the Brazilian market as lasting. “We have 67% of foreign investor custody, so we have a privileged view of the flows. There was a very strong inflow into bonds and equities, and at the moment we continue to see a strong flow into Brazil. Even long-term direct investment is likely to see a substantial increase this year. We project around $50 billion,” Mr. Marangon said.

Source: Valor International

https://valorinternational.globo.com