Keeping a watch

New York, March 15 (Reuters): Citigroup Inc’s international consumer chief said on Tuesday his unit is looking to generate annual profit growth at a mid-teens percentage by a combination of opening new branches and “selective” acquisitions in Europe and Asia.

Ajay Banga, who runs the international consumer unit, said he views Brazil, China, India and Korea as key markets in which the New York-based company can expand its existing network, while considering potential acquisitions.

Citigroup, the largest US bank, this year hopes to add 200 branches, including automated loan machines, and 400 consumer finance locations outside North America.

Banga also said the international consumer business, which includes retail banking, credit cards and consumer finance, was on track for “good” growth in 2006, and performed in line with its expectations in January and February.

Within slower-growing Europe, “to get a decent size in these countries, it’s going to be tough to do it organically in the next few years,” Banga said. Acquisitions would “most likely” be needed, he said.

“We are already relatively big in Belgium, Germany and Greece and I would like to get scale in those three and a bigger presence of some of the others,” Banga said.

Citigroup’s largest global rivals include HSBC Holdings Plc, Royal Bank of Scotland Group Plc and JP Morgan Chase & Co, among others.

In August, Citigroup chief executive Charles Prince divided the consumer business into international operations, led by Banga, and North American operations, led by Steve Freiberg.

In 2005, the international business increased profit 6 per cent to $4.1 billion, while revenue increased 12 per cent to $18.4 billion.

Both figures amounted to 38 per cent of the totals for Citigroup’s overall consumer business. To achieve his growth targets, Banga wants to increase the profit contribution by the international business to 50 per cent in four to five years.

Much of this will be done in existing markets, and the international consumer bank has no plans to soon venture into new markets.

“For the next couple of years, we should still be investing in putting on scale in the markets where we are,” Banga said. Brazil, India and Russia “are enormous growth potential markets”, he said.

Banga declined to identify specific countries where Citigroup is now eyeing acquisitions.

He said, though, that he would consider acquisitions adding to Citigroup’s distribution in markets that are growing faster than more developed markets such as Europe and Japan.

Specifically in Europe, bank valuations in the United Kingdom appear “somewhat less than attractive”, while in Germany the valuation multiples are “cheaper than the UK”, but still not inexpensive.