ANDREW Au, a 27-year Citigroup veteran, is the man at the helm of the United States bank's operations in China, seeking to capitalize on opportunities in the world's second-biggest economy as the financial institution emerges from the global financial crisis.

Au, a Hong Kong native, was appointed chief executive officer and chairman of Citibank (China) Co Ltd in early 2008. It's a big job at one of the most ambitious overseas banks operating in China.

Citigroup is no stranger to the country. In 1902, the bank opened an office in Shanghai as the first American bank to do business in China. The bank re-entered modern China in 1983 with a branch in the southern city of Shenzhen.

In 2007, Citigroup joined HSBC, Standard Chartered and Bank of East Asia to become the first offshore banks to incorporate subsidiaries in China, taking advantage of the nation's market-opening policies in banking as part of China's entry into the World Trade Organization. Today Citigroup has 34 banking outlets in China, compared with 108 for HSBC, 93 for the Bank of East Asia and 66 for Standard Chartered.

Shanghai Daily interviewed Au in his office in the Citigroup Tower, Citigroup China headquarters in Lujiazui overlooking the Bund.

During the exclusive one-hour interview, Au shared some views on how efforts are proceeding to gear up growth in China, what lessons have been learned from the financial crisis and where China stands in the competitive world of banking.

Q: What are your 2011 and longer-term targets?

A: We have a very clear plan to build our business in China in a significant manner. You can expect faster network expansion and more hiring this year. We are opening in new cities, adding new customers, and expanding our scope of business. For the longer term, in short, we are targeting healthy, stable growth.

Q: How many new staff has Citigroup added in that expansion?

A: We now have more than 5,000 staff working for us in China, up from 4,000 in 2009.

Q: What's your network strategy? How do you deploy it?

A: We're deepening our network. In 2010, we opened a branch in Guiyang and obtained regulatory approval to open three branches in Nanjing, Changsha and Wuxi. We also opened sub-branches in Beijing, Shanghai, Tianjin and Shenzhen and early this year in Hangzhou. We have built up Wi-Fi and interactive touch screen-enabled smart banking outlets to win the hearts of clients.

Q: Citigroup has fewer outlets than competitors in China. Does that concern you?

A: Network is important, but it is not everything in achieving success. It's like soccer. You need the super stars, the team work, the good managers and other qualities to win the game. For us, network, products, customers and professional services all matter in pushing forward our business.

Q: So, in your view, how can Citigroup stand out from the competition?

A: First, innovation. It is part of our DNA. The smart banking outlet is one showcase. Second, our global network. Third, our products. Fourth, our professional services. We are very much devoted to employee training. That's partly why we're called the 'university of banking' in the industry.

Q: Don't you feel the pressure of professional turnover due to that?

A: We're confident we can retain the right people we want. I have heard stories of other banks trying to poach our people, but the actual turnover rate is low. For us, the biggest challenge is to hire the right people. Bringing in new blood that suits Citi's culture on a scale to match our growth momentum in China is one big challenge for me.

Q: What was the impact on Citigroup in China of the global financial crisis and the client uneasiness it caused?

A: First, I should note that our company has come a long way since the crisis. We have overhauled our risk management organization, reduced our most risky exposures, and defined a clear strategy for sustainable growth and profitability. In 2010, Citi reported four straight quarters of profit to record net income for the year of US$10.6 billion. And Asia-Pacific was the biggest contributor to our net income. Second, Citi China is an independent legal entity. We're self-funded with sufficient capital. In that sense, Citi China was cushioned from the crisis. We responded to clients' concerns with immediate communications. We didn't cover up problems. We admitted there were some issues and explained how we were addressing them, and thereby gained the trust of clients. In 2010, we grew our client base in line with overall expansion.

Q: Does Citigroup have any plans to issue yuan-denominated bonds or to sell shares when the new international board opens in Shanghai?

A: Citi China has sufficient liquidity. We met the regulator's maximum 75 percent loan-to-deposit ratio well ahead of the end of 2011. That's why we have no plans to raise capital at this stage.

Q: China is targeting slower economic growth in its 12th Five-Year Plan. How will that impact your business?

A: A lesson learned from the crisis is to expand our financial business in line with the real economy. What we do now is linked to the real economy. China showed its determination to seek quality rather than quantity in its economic growth in the 12th Five-Year Plan. We take that as a positive for Citi, and are very optimistic about the outlook for our business in China.



Q: How do you evaluate Citigroup's real estate loans? Are they under control?

A: Our exposure to property loans is extremely limited. We see some slowdown in mortgages, but as we're a relatively small player in the mortgage segment, the impact is limited.

Q: How would you describe Citigroup China's business in 2010 in terms of lending and revenue growth?

A: We are really excited about what we achieved in 2010. It was a fruitful year for us because business expanded beyond target. We will make details of our financial performance available later in the year.

Q: What's your most memorable experience at the helm?

A: The financial crisis was of course challenging, but my most unforgettable experience came from my visit to Hubei's Jingzhou in 2008 to set up our first rural lending company in China. Rural lending is neither profit-chasing nor charity. It showed how society and a bank can work together in a win-win situation. We now have three rural lending companies that are all not losing money. We're going to open more such companies in China.

Biography

Chief Executive Officer of Citibank in China

Chairman of Citibank (China) Co Ltd

Career path

2008 Citibank chief executive in China

2005 Citibank Asia Pacific commercial banking head

2003 Citibank Asia Pacific trade head

2002 Citibank country officer for New Zealand

2000 corporate banking head for Citibank in Thailand

1998 senior credit officer

1984 joined Citibank in Hong Kong

Educational background

B.A. (Hons) from University of Western Ontario

Citibank

1902 Opened a branch in Shanghai as the first US bank to foray into China.

1983 Re-entered modern China by opening a Shenzhen representative office.

1993 Shifted its China headquarters from Hong Kong to Shanghai.

2002 Teamed up with Shanghai Pudong Development Bank as strategic partner.

2006 A Citi-led consortium bought 85.6 percent stake of Guangdong Development Bank.

2007 Among the first four overseas banks to set up local incorporation in China.

2008 Issued yuan debit card. Citi opened its first lending company in Hubei Province in China.

2009 Became market maker in China's interbank market.

2010 Opened five consumer outlets in China.