BEIJING - Citigroup, the third-largest US bank by assets, expects to achieve more than 50 percent revenue growth in its investment banking business in China next year, thanks to an abundant capital flow and a strong deal pipeline, according to one of the financial group's top executives in the country.
"Citigroup's strong capital base and the ability to maintain capital costs at low levels will help us achieve that goal," Eugene Qian, co-head of Citigroup's investment banking team for China, said at a Beijing news briefing on Thursday.
The company has more than 20 Chinese IPO deals in the pipeline for next year, Qian said, adding that the growth momentum of mergers and acquisitions (M&A), especially outbound deals by Chinese companies, will remain strong in 2011.
"We are confident that China's economy will remain stable next year and the global capital market (environment) will be better," he said.
Citigroup is quickly catching up with rivals such as Goldman Sachs and Morgan Stanley to tap China's growing demand for financial underwriting and advising.
Qian said that the Chinese investment banking pie is currently big enough for all the players, and that immediate head-to-head competition among foreign banks is unlikely.
The New York-based group is reported to have signed an agreement with China's Zhongyuan Securities to tap the A-share market by setting up a securities joint venture. Qian declined to comment on the deal, but said Citigroup is still actively seeking partnerships with local securities companies.
In October, Citigroup successfully facilitated the $1.1 billion Hong Kong IPO of the Chinese wind turbine maker Xinjiang Goldwind Science & Technology Co, when it acted as co-sponsor of the deal. It also served as financial adviser to PetroChina Co and Royal Dutch Shell's joint acquisition of the Australian company Arrow Energy in a $3.05 billion deal.
Qian noted that transactions in the energy and natural-resources sector and the high-end manufacturing industry will continue to dominate China's outbound M&A deals.
While expanding its investment banking business in China, Citigroup is also eyeing chances to boost its commercial banking by tripling the number of its branches in the mainland from the current 31 outlets to about 100 in two to three years.
The bank will also increase its workforce in China to as much as 12,000 during the next three years.
With Citigroup's business in its home market still weak, Asia has become an important source of revenue stream for the bank. It reported a net profit of $9.3 billion in the first nine months of 2010, with the Asia-Pacific region contributing $3.5 billion.
In 2006, Citigroup acquired an 85.6 percent stake in Guangdong Development Bank for $3.06 billion to gain a bigger slice of the Chinese banking market.
