Citi moves Nairobi wealth investment unit to Singapore
Citibank managing director Daniel Connelly during a past event. FILE
What you need to know:
Citibank Kenya termed closure of the Nairobi unit, which focused on investing client’s cash in India, a “business realignment”.
Three of the staff who were in the Nairobi office will move to Singapore.
Sources had informed the Business Daily that the bank’s decision to close the unit was the result of heavy taxation by Kenya Revenue Authority but Citi did not deny or confirm the claim.
Citibank Kenya has moved to Singapore a specialised wealth management unit resulting in 10 job losses as chief executive Daniel Connelly prepares to leave his position in June.
The bank termed closure of the Nairobi unit, which focused on investing client’s cash in India, a “business realignment”. Three of the staff who were in the Nairobi office will move to Singapore.
“As part of normal business realignment and a move to more efficient ways of doing business, the Non-Resident Indian (NRI) unit has been closed in Kenya. Citi has taken measures to ensure that clients will not be impacted negatively and we have informed the regulators of our plans,” said Citibank in a response to the Business Daily queries.
NRI wealth management units became popular among top global banks mid last year as they sought to take advantage of a foreign exchange mobilisation programme initiated by the Indian government.
The Indian government gave incentives to banks to encourage their clients to inject money into the country’s banking system in an effort to prop up a weakening rupee.
Banks accumulate the deposits by operating the highly lucrative savings account, NRI, which targets wealthy depositors with an opening deposit of Sh425,000 ($5,000).
On its website Citibank promises an interest rate of four per cent on daily balances, which is higher than that offered by other savings accounts.
Citibank Kenya’s customer deposits stood at Sh47.5 billion as at September last year compared to Sh44.2 billion a year earlier.
The Indian authorities were also worried that the rupee would be adversely affected by the impending US cutback on its three-year economic stimulus plan through which it injected $85 billion into the economy every month. India successfully used the strategy in 2000 to prop up its currency.
Sources had informed the Business Daily that the bank’s decision to close the unit was the result of heavy taxation by Kenya Revenue Authority but Citi did not deny or confirm the claim.
Mr Connelly is expected to leave after a four-year period.
“Citi has a global policy of rotating seniors and he will be moving onto a new area in Citi, he will be assisting in the process of finding a replacement and ensuring a smooth transition,” said the bank.
In the nine months to September last year the bank’s after-tax profit dropped by Sh1.3 billion to Sh2.3 billion.
Citi’s growth has lagged behind the industry performance, which has seen it lose market share to 3.42 per cent in 2012 from 3.87 per cent in 2010 as per Central Bank of Kenya data.
This has seen the bank lose its position among top 10 lenders in the country to rank eleventh. The bank has been positioning itself to take advantage of the country’s nascent oil and gas industry, which will require huge capital financing.
Citibank hopes to ride on its global experience and the strong balance sheet of its parent company to grow its loan portfolio. The pending changes at Citi will see it join other lenders who have ushered in new leaders in the past year.
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