Citi Commercial Bank bridges cultural gap with China Desk initiative

CASE STUDY 1: CITI CHINA DESK Citi Commercial Bank bridges cultural gap with China Desk initiative

The desk opens Singapore to mid-sized Chinese firms seeking to penetrate ASEAN.

CCB opened a new China Desk in Singapore dedicated to China’s emerging market champions

Asian consumers have started to thirst for Chinese brands. Take the demand for phone brands, for example—a survey found that these consumers’ top five picks, amongst the ten most preferred global brands, are from China.

To support Chinese firms taking advantage of this trend, Citi Commercial Bank (CCB) opened a new China Desk in Singapore dedicated to China’s emerging market champions. The new desk adds to CCB’s expanding network of six Asia desks in the region.

Although the China Desk concept is not new to Citi and Singapore, this recently established desk is unique because it is the first for Citi to support mid-sized businesses from China to use Singapore as a launching pad into the country and other markets in ASEAN, CCB’s Managing Director and Singapore & ASEAN Head Hsiu-Yi Lin told Asian Banking & Finance.

“We launched the first Singaporebased China Desk to serve our

With CCB’s China Desk, clients can have the complexity of entering new markets cut down significantly

Chinese clients in Singapore back in 2010. And a second desk in Singapore was launched back in 2018 to serve Chinese clients expanding into ASEAN from Singapore,” Hsiu-Yi explained, emphasising that these desks support Chinese multinational companies (MNCs).

What makes the CCB China Desk stand out is that it is helmed by experienced bankers, with several of them from China—specifically from the CCB China branch.

“These specialists have a deep understanding of the local operating and regulatory environments across the different ASEAN markets on top of Citi’s products and services. Importantly, many of these bankers have supported these Chinese firms back in China before their expansion into Southeast Asia, and so, they have deep knowledge of the requirements of these clients in addition to understanding the nuances of the Chinese business culture, language and etiquette,” Hsiu-Yi said.

One-stop-shop

With CCB’s China Desk, clients can have the complexity of entering new markets cut down significantly.

“We notice that as companies grow rapidly, expand internationally, or both, they inevitably encounter challenges in their banking flow that could slow them down or prevent them from reaching their full potential. Without a global bank or global solutions, these companies would spend endless hours on their banking needs to the point that it becomes an obstacle in their journey,” Hsiu-Yi said.

Hsiu-Yi explained that, in the past, if clients want to enter several markets in ASEAN, they have to work with CCB’s local teams in every market. And if they don’t work with CCB, they would have to work with different banks across these markets.

With the Singapore China Desk, it is now a one-stop-shop for them, made more easily as they are manned

by bankers who understand their business culture, language, and etiquette.

“As we are present in six markets in ASEAN including Singapore, Indonesia, Malaysia, Vietnam, The Philippines and Thailand, this enables their expansion into the region to be much more seamless,” Hsiu-Yi added.

Why Singapore?

“For many years, Singapore has been the gateway to ASEAN for many global MNCs due to a host of reasons such as rule of law, robust infrastructure, ease of doing business, effective government and established regulatory frameworks, human capital, motivated workforce, intellectual property protection and in recent years, fintech and innovation,” Hsiu-Yi said.

Hsiu-Yi also said that Singapore has a geographic advantage within ASEAN because it is situated at the tip of the Malay Peninsula where the main trading and shipping routes of the world converge. Additionally, Singapore is also less than a fourhour flight away from most ASEAN countries.

CCB anticipates more Chinese firms to set up their presence in Singapore to get better access to the ASEAN markets.

Hence, the decision to place the first CCB China Desk in Singapore is timely as Hsiu-Yi said that they have seen steady growth in their portfolio of Chinese firms within the ASEAN region.

“Client acquisition of Chinese corporates has grown at 46% compound annual growth rate (CAGR) and revenue at 76% CAGR between 2019 and YTD 2021. Not surprisingly, we are seeing high double-digit percentage growth across various industry sectors like industrials, consumer products, healthcare and tech,” Hsiu-Yi added.

Right now, there are still no concrete plans on where CCB would expand their next China Desk; however, CCB plans to expand its Singapore-based China desk team over time.

Hsiu-Yi Lin

The bank also has several new projects in the pipeline that would leverage Citi’s global network.

“Whilst we continue efforts to strengthen the ‘human touch’ of our business as relationships continue to be key for growth in a digital banking world, we are also doubling down on our digitisation strategy and leveraging AI technology to better support our clients. In addition to expanding into new markets, we plan to invest even more in countries where we are presently and this includes headcount expansion,” Hsiu-Yi said.

Singapore has been the gateway to ASEAN for many global MNCs

APAC banks’ outlook stable, but face uneven recovery: Moody’s

The expected economic recovery in APAC will solidify in 2022 as pandemic effects subside, which should support banks’ creditworthiness—although the pace of recovery will be uneven.

Diversified economies and those with higher vaccination rates will rebound faster, with about half of APAC economies seeing a growth rebound relative to prepandemic years, according to a report by ratings agency Moody’s.

“Banks will maintain solid balance sheets with stable solvency and liquidity metrics. Problem loans will increase modestly with the ending of remaining government support measures in most markets, however, their strong credit reserves will mitigate the related asset risk for banks,” said Eugene Tarzimanov, a Moody’s vice president and senior credit officer.

Tarzimanov added that core capital ratios will remain stable as improving profitability will support credit growth, dividend payouts and share buybacks.

Some central banks may also choose to raise interest rates amidst higher inflation and fewer disruptions caused by the COVID-19 pandemic.

Overall, however, monetary policy will remain largely accommodative or neutral in most APAC economies.

“Whilst private debt levels are high, generally low-interest rates and the broad economic recovery will support bank borrowers’ debt repayment capacity,” Tarzimanov said.

Meanwhile, high asset prices across the region present mixed credit implications for banks. On the one hand, property price inflation is expected to strengthen its collateral value.

But on the downside, the high prices increases the risk of a sudden market correction, should economic or financial market conditions abruptly deteriorate, Moody’s warned.

Meanwhile, high commodity prices are positive for banks in commodity-exporting economies like Indonesia and Malaysia, as well as trade finance hubs like Singapore and Hong Kong.

Moody’s also expects APAC regulators to introduce more rules to support and guide banks in this transition to low carbon or more environmentally friendly portfolios.

The expected economic recovery in APAC will solidify in 2022