Citi targets China investment bank unit launch, 30 new hires by end 2024-source

By Selena Li

HONG KONG (Reuters) - Citigroup Inc is aiming to launch its wholly owned China investment banking unit as early as the end of this year and hire about 30 people for the business, a person with direct knowledge of the matter said.

The Wall Street bank could triple staffing in the unit, which will focus on the domestic capital market, to nearly 100 in the coming years by making local hires and transfers from Hong Kong and other markets, the person said.

Citi, which offers corporate, institutional and other banking services in China, applied for a wholly owned mainland Chinese brokerage business licence in late 2021 as part of its push to ramp up its presence in the market.

The Chinese securities regulator permitted the U.S. bank to proceed and set up the unit last month, said the person, who declined to be named as the bank's China business plans are not public yet.

The China Securities Regulatory Commission (CSRC) official record shows that the regulator on Dec. 28 "made a decision" on accepting or rejecting Citi's application for setting up a local investment banking unit. It did not elaborate.

A Citi spokesperson declined to comment, while CSRC did not respond to a Reuters request for comment.

The launch of the China venture will see Citi join its Wall Street rivals Goldman Sachs, JPMorgan and Morgan Stanley who have boosted their equity holdings of local brokerage businesses in recent years.

It will come at a time when the growth engine of the world's second largest economy is losing steam, dragged down by a deepening real estate crisis.

The economic woes as well as U.S.-Sino friction kept overseas investors underweight on Chinese equities last year and led to a flight of foreign capital.

However, its domestic initial public offering (IPO) market remained robust and was globally the busiest in 2023 for the second year in a row.

China's long-term prospects are still a draw, and with the country continuing to open up its financial sector worth trillions of dollars to foreign players, a string of U.S.-based financial firms have expanded their operations there.

TOP BRASS IN PLACE

Citi, which has been serving Chinese clients by helping them raise funds overseas, is targeting to launch the China investment banking unit in 12 to 18 months, the source said.

Its Chinese clients raised around $20 billion last year in equity and debt capital overseas via the bank.

Citi has already hired the chief executive, chief financial officer and chief compliance officer for the China investment banking unit, the source said, and will add 30 other staff by end of this year.

The bank is communicating with Chinese regulators on data compliance as part of its infrastructure build-out for the business. China's new data regime has posed operational challenges and burdened global financial firms with extra costs.

Citi's China expansion also comes as it is in the midst of its largest restructuring exercise globally in decades and after it announced in November the appointment of a regional investment banking leader.

The U.S. lender exited the retail banking business in China and sold its China wealth portfolio to HSBC last year as part of a plan to globally withdraw from 13 retail banking markets.

(Reporting by Selena Li; Editing by Sumeet Chatterjee and Muralikumar Anantharaman)