Citigroup’s fresh thrust into sector

Citigroup aims to expand operations into providing domestic clearing services

“We are seeing a significant increase of interest in Vietnam’s capital market from our existing customer base, not just from Asia, but also the US and Europe,” said Margaret Dawson, the Asia Pacific region head of Citigroup Securities Services.
“This, coupled with favourable market developments, is generating greater demand. Therefore, it is the right time to enter the market,” she said.
Experts said recent market developments, such as the opening of the Hanoi Trading Centre combined with the decision by the State Securities Commission to establish a central securities depository, and the relaxation of foreign ownership limits, are creating a more favourable investment environment.
In addition to Citigroup, several other foreign banks like the Hong Kong Shanghai Banking Corporation, Deutschbank, and Standard and Chartered are interested in providing direct custody and clearing services.
With the licence, Citigroup will provide securities custody and clearing services to local and international investors. These services will include account openings, safe custody, receipt and delivery of securities, income collection, corporate action and proxy processing, foreign exchange, securities and cash reporting.
Experts said Citigroup will have an advantage over other banks as it has been active in Vietnam for more than 10 years and has a successful franchise and a broad base of foreign and local customers.
“We are seeing growing demand from institutional investors and with the favorable developments in the stock market, we are launching direct securities services as part of Citigroup’s global strategy to expand in key developing markets,” Neeraj Sahai, the global head of Citigroup Securities Services, said.
Dawson added: “We expect to provide clients in Vietnam with the same high level of service and innovation we provide in Asia Pacific and elsewhere, with access to our local market expertise through our offices in Hanoi and Ho Chi Minh.”
“We see our role as keeping foreign investors informed about local market practices,” she continued. “We also act as an intermediary between public authorities and foreign investors to facilitate communication of needs and concerns.”
An example of this is Citigroup’s proprietary customer event, the Vietnam Financial Forum, which will be held on March 1 in Hanoi. The aim is to provide a forum where the attendees, from both local and overseas institutions, can gain a better understanding of key financial developments.
“Although indirect foreign investment flows have been rather modest, as the market continues to open we anticipate it will grow,” Sahai said. “The government only recently increased foreign investment limits on listed firms, which should increase the indirect foreign investment flows.
“As Vietnam develops its capital market it will increase opportunities for investors, which will translate into greater indirect foreign investment flows,” he added.
Charly Madan, the Citigroup country officer for Vietnam, applauded the first foreign-invested enterprise being recently listed on the Securities Trading Centre in Ho Chi Minh Centre. Taya brought 3,653,480 shares worth $7.8 million of market capitalisation to the local stock market.
“Its presence in the market immediately led to an overall increase of all stocks traded in the center,” Madan said.



No. 750/February 27-March 5, 2006