Private bank acts as gateway to Citigroup empire

Even before the Iraq war, anti-American feeling was not uncommon in Europe. Now, as President George W Bush attempts to mend fences with former friends across the Atlantic, the sentiment is close to rife.

But US super bank Citigroup has no plans to de-Americanise its private banking proposition for Europe.

Citigroup’s private banking chief Peter Scaturro believes Europe provides one of the bank’s largest opportunities and has an ambitious growth plan for the region. Yet he happily flies in the face of the entrenched idea that European clients respond best to a service minutely tailored to suit them.

Mr Scaturro’s plan hinges on the notion that Citigroup is a global bank, contrasting sharply with HSBC’s projection of itself as “the world’s local bank”.

“We have a tremendous understanding of local markets,” he insists. “But the strategy of the private bank is not to compete at a local level with local banks.”

On a flying visit to London, Mr Scaturro – who spends 15 per cent of his time in transit, visiting 35 offices worldwide – revealed his targets to PWM. He is confident that a new global-oriented service will allow Citigroup Private Bank to increase revenues by 20 per cent annually in Europe, as it did worldwide during the last 12 months. Revenue was up 21 per cent to $510m (e437m) in the second quarter of this year, from $428m in Q2 2002.

The bank looks similarly strong in terms of assets under management. Client assets were up 10 per cent at the end of Q2 to $180bn, from $163bn in Q2 2002.

Beyond traditional banking

Mr Scaturro wants the private bank to present itself in Europe as “a true global wealth manager”. As such it is to act as a “gateway” within the Citigroup empire, providing clients with access to the company’s entire suite of banking and investment services. This starts with access to traditional banking services such as credit cards, and access to investment in securities and funds – both in-house and external. But clients are also able to access Citigroup’s FX capabilities and those of its corporate and investment bank.

“Many of our clients are entrepreneurs or have family businesses,” says Mr Scaturro. “They therefore might want to sell their business or expand it through acquisitions. Some families need liquidity, others need access to capital markets.”

He stresses that Citigroup sells itself on the basis of these global capabilities, which stretch “well beyond traditional banking”. “Traditional activities such as lending can be handled by local banks, while we will advise on the portfolio globally. Anyone who thinks they are going to manage 100 per cent of a client’s assets is naďve. Families will always have a local provider for basic banking and so they should. But Citigroup comes into the picture as their one adviser for the big decisions, such as acquiring other businesses or managing wealth on a global basis.”

He adds that this segment of business has become more lucrative since the bear market. “Before, wealthy families spread their wealth among many advisers. Everyone looked good. Now, people have been burned and families prefer to focus on just a few trusted advisers.”

The bank’s strongest presence is currently in the UK and Switzerland, followed by the UK expatriate markets in Spain and Greece. Mr Scaturro wants to expand coverage, but only where there is significant wealth. The aim is to serve the 100-200 top families in Europe.

Alternative products

The internal investment management product range remains central to Citigroup Private Bank’s offering. “At the moment, families want alternative products,” says Mr Scaturro. “Especially those products where they have the chance to invest alongside the proprietary capital of Citigroup. We offer them the full range of venture capital, private equity, hedge funds and real estate.”

Mr Scaturro concedes that “as big as Citigroup is, even we need to open up to outside capabilities”. For the past year, one third of all the private bank’s alternative products have been non-proprietary. Citigroup uses a lesser proportion of external products in other asset classes, where Mr Scaturro feels the internal asset management division has stronger capabilities.

“Where external providers have something unique or where we feel our product could be better, the field is wide open. We take a view on the market and see where the opportunities are,” says Mr Scaturro. While due diligence is strict, he adds, “external providers don’t have to be a big name or a certain size”.

Service is another key element to the Citigroup proposition. Within the next 15 months Mr Scaturro plans to roll out “Project One”, an enhanced reporting and analytics system already live in the US and Latin America. “We decided we needed more information, analysis and insights for the client, so we have put a lot of time and energy into this platform,” he says.

Citigroup Private Bank is also prepared to buy in additional expertise. “Our growth to date has been purely organic, but we are constantly looking to acquire businesses or capabilities or interesting sets of clients through the right deal.” He hints that the bank is close to concluding an acquisition that would boost its service offering, to be announced soon.

Latam expert takes over helm

Frances Aldrich Sevilla-Sacasa has been recruited to lead Citigroup’s private banking push in Europe, with a regional brief that also extends to Latin America.

She was recently brought in to replace Christopher Preston, head of Europe, Middle East and Asia, who left the firm after less than two years. The stewardship of Ms Aldrich Sevilla-Sacasa will no doubt be watched closely by Europeans, as she was previously managing director of Deutsche Bank’s Latin American Private Banking unit and her experience is primarily in that region.

Adlrich Sevilla-Sacasa (above) has replaced Preston

A new European Advisory Board has also been established to support the business drive in Europe. The board brings together key personalities across the Citigroup empire. They will research the needs of European clients and develop new types of services based on their findings, such as FX-centred offerings and investment banking-based products.

The board consists of Mr Scaturro, Ms Aldrich Sevilla-Sacasa, Win Bichoff, chairman of Citigroup Europe and Michael Kleme, chief executive for EMEA global corporate and investment bank.

Scaturro: ‘People have been burned and families prefer to focus on a few trusted advisers’