Business | Banking

Citi looks to rebuild relationships in Gulf

Lender has been at odds with sovereign funds

  • Financial Times
  • Published: 00:00 March 18, 2010
  • Gulf News

Dubai : Citigroup plans to step up its activities in the Arabian Gulf to rebuild its long-established regional franchise that has been tarnished by disputes with regional investors.

Citigroup has operated in the Arab world for almost 50 years and the Gulf came to the rescue of the embattled bank in the early stages of the credit crunch when the sovereign wealth funds of Abu Dhabi and Kuwait pumped billions into the US-based lender.

However, the relationships with two of the world's largest institutional investors have since soured.

The Abu Dhabi Investment Authority has filed an arbitration claim against the US bank, alleging that it was the victim of "fraudulent misrepresentations" over its November 2007 investment.

The Kuwait Investment Authority, which invested in Citi in January 2008, sold its stake in the bank in December 2009 and has held internal discussions on scaling back its relationship with Citi, after becoming irritated by a perceived lack of communication from senior management, according to people familiar with the matter. Vikram Pandit, Citi's chief executive, last month paid a three-day visit to the Gulf to rebuild relationships.

He met local officials, regulators, clients and investors, and the bank's top regional executive expects a closer dialogue in the future.

"You will see us increasing our focus on and our investment in our franchise here and part of that will involve more senior management visits in the future," Atiq Ur Rehman, Citi's new Middle East head, told the Financial Times.

Branches

Citi has 40 branches and 3,500 employees in eight Middle East countries plus Pakistan, a regional balance sheet of about $10 to $12 billion (Dh44 billion) and revenues of $1 billion in 2009, according to people familiar with the matter.

Rehman, who was previously co-head of capital markets origination in Europe, Middle East and Africa before taking over as head of its regional operations in January, declined to give the bank's net profit in the region, but stressed that its "Middle East business on the ground has been remarkably resilient".

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