Citigroup launches push into Thai broker business http://today.reuters.com/business/newsarticle.aspx?type=ousiv&storyID=2006-04-20T032336Z_01_BKK314901_RTRIDST_0_BUSINESSPRO-FINANCIAL-THAILAND-CITIGROUP-DC.XML
Wed Apr 19, 2006 11:22
By Chawadee Nualkhair
BANGKOK (Reuters) - Top U.S. bank, Citigroup (C.N: Quote, Profile, Research), said on Thursday it was entering Thailand's $103 billion brokerage industry in a bid to capture growing interest in Southeast Asia's second largest economy.
Citigroup has been in Thailand for 37 years, but has not seen a need to set up a brokerage until now, country head Gary Newman told Reuters hours before the U.S. lender was to officially unveil its brokerage later in the day.
"With the increasing global interest in Thailand, this was set up first and foremost to service offshore investors. But there are also big local investors. We're also looking to expand into that market," the 43-year-old New Zealander said.
Citigroup's venture, Citicorp Securities (Thailand) Ltd., started brokerage operations on March 6 with 25 new staff as a sub-brokerage, meaning it does not have a seat on the stock exchange.
Newman, who came to Thailand last July from Citigroup in New Zealand, is confident Citigroup can find its place in an already overcrowded market.
"This market is pretty well served already, but we feel we can add value to our clients by offering them access to our services," he said.
Citigroup is entering at a time of fierce competition from the likes of market leader Kim Eng Securities (KEST.BK: Quote, Profile, Research) and continuing uncertainty wrought by political upheaval.
Kim Eng holds a market share of 9 percent, SCB Securities has 7.6 percent, Phatra Securities (PHAT.BK: Quote, Profile, Research) and Asia Plus command 6 percent, and UBS (UBSN.VX: Quote, Profile, Research) has around 5 percent.
Daily trade averaged 16.4 billion baht ($420.7 million) a day last year, down from 20.5 billion baht in 2004, according to stock exchange data.
STILL A GOOD STORY
But the stock market <.SETI> has managed to rise more than 7 percent so far this year, helped by net foreign buying of more than 112 billion baht despite calls for Prime Minister Thaksin Shinawatra to resign on allegations of corruption and cronyism.
The tax-free $1.9 billion sale of a stake in Shin Corp. (SHIN.BK: Quote, Profile, Research), the telecoms and satellite firm Thaksin founded, fanned anger among middle-class taxpayers and sparked national security concerns.
Newman, a 12-year Citigroup veteran, said Thai capital markets had proven resilient to the political upheaval amid a sturdy economy the government expected to grow 4.5-5.5 percent this year after 4.5 percent expansion in a natural disaster-plagued 2005.
"You've had a stable, growing economy. The fundamentals are pretty good. Corporate balance sheets are strong. Thailand is a really good story from all of these angles," he said.
"Because there's no real clarity to any possible downside, it's hard to make big decisions. I think people still see value."
Citigroup's new venture does not dull its hunger for more underwriting and corporate finance business, aided by a focus on luring good talent and using its global network.
It has already started 2006 on a promising note, underwriting a 6 billion baht corporate bond deal with Thai power firm Gulf Cogeneration Co. and a 3 billion baht corporate bond deal with Thai consumer finance firm Easy Buy PCL.
High-profile hirings have bulked up areas such as debt capital markets, securitisation, research and investor sales, prompting grumbling from rival banks.
But resume-clutching financial executives need not despair: Citigroup remains on the lookout for new talent, Newman said.
"It's an absolute requirement to have that skill set on the ground because this market consistently demonstrates sophistication," he said. "Our clients expect nothing less."
($1=38.98 Baht)
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