Citibank – 40 Years in Jordan

Citi is marking its fortieth year of operating in Jordan. The Kingdom’s important banking sector has changed a great deal over this time, but the financial giant appears to have adapted and thrived under the most challenging of circumstances.

By Dina al-Wakeel

Photography by Alaa’ al-Sukhny

For the past four decades, Citibank has been offering its services to local and international high-end corporations in Jordan, across different sectors like aviation, telecoms, mining, and petroleum. Besides their role in providing advice to the government and large companies, and offering investment banking services, Citibank also recently decided to branch out into commercial banking for medium-sized corporations with future expansion prospects.

Citibank, which is the only US bank operating in the Kingdom, has also used its strategic presence in Jordan to advance into the hugely attractive, but highly underserviced, Iraqi market. Furthermore, Citibank’s advisory expertise and global network have enabled it to play a pivotal role in the issuance of the Jordanian government’s bonds in New York, which backed by the US government guarantees, were quickly subscribed.

Citibank’s Chief Executive Officer for Jordan and Iraq Mayank Malik, believes that his bank is playing to its strengths by utilizing its international network and expertise, along with a deep understanding of the local and regional markets.

Citibank has been operating in Jordan for the past four decades. How has it been and what did you add to the local banking sector?

We see ours as a long-term commitment and our experience has been good with sustained growth across all the client segments that we’ve served over forty years. I think that’s quite an achievement and it also reflects the stability which Jordan has. We are actually the only US bank operating in Jordan. Citi is the largest bank in the world as far as network is concerned because we operate in over 100 countries. The other thing we are proud of this year is that we also got awarded the best foreign bank in Jordan which is a great recognition from our clients and the outside world. It gives us the motivation to excel even further.

Globalization, digitization, and investment in talent are at the forefront of our strategy at Citi. As a global player we have invested a lot of money into developing cutting-edge technology. So what we offer in Jordan is exactly what we can offer in New York or Singapore or anywhere else in the world. Citi’s global network is what sets us apart. In today’s environment and the regulatory setup it’s becoming increasingly difficult to expand into new countries and environments because of the stringency in regulation that followed the financial crisis of 2008. So as a result, if we have a client doing business in other countries, chances are that we will be on both sides of the transaction.

At Citi we are dedicated to attracting, developing, and retaining top talent. In our business we don’t have a tangible product, what you’re selling is intangible, that’s why the person offering that product becomes extremely important in that process. We have been able to attract talent, which we believe is the best available.

How important has the local banking sector been to Citibank?

We see Jordan in two perspectives: one is the Jordanian market itself, which is a market where we are expanding. We recently launched commercial banking, which means expanding the footprint and client coverage to include companies, which are not just those that are top rated, but the mid-sized companies as well. We feel that’s an area where a lot of growth will come in the future. The second perspective is that we are also looking at not just what we can do in Jordan, but what we can do from Jordan. If you look around us, Jordan is a very good gateway into many other neighboring countries in the Levant, and the immediate one that we see, and many of our clients also see, is Iraq. Iraq is a country with 30 million plus people with huge amount of oil wealth, as a result of that there will be a gigantic process of infrastructure creation, which will happen because the country has been ravaged by war for many years.

What kind of offerings do you provide to your customers in Iraq, and what’s your client base like?

We offer investment, corporate, and commercial banking services. We cater to our multi-national clients, who are an important and growing group of clients. These include international companies which have a whole range of banking requirements because they have to pay their suppliers, salaries, and import equipment. We have a very dominant share of the oil companies market today because of the products we offer. The second segment is those companies which are involved in the infrastructure creation process, including electricity generation and telecommunication. These are not necessarily American or European clients; we have Indian, South Korean, Japanese, Turkish, and other companies, too. The third is working with the Iraqi government and the public sector on large and more complex transactions because Iraq, like many other countries in the region, still has a very significant public sector. So we work with them on modernizing the infrastructure creation and raising the financing for that to happen.

Citibank has also been involved in the Jordanian government’s bonds offering. How important were these bonds to the Jordanian economy?

What we provide is the advisory and the more complex transaction execution. I’ve recently been to New York with a Jordanian team, which included the Finance Minister and the Central Bank’s top officials, and we executed our $1 billion bond. This is the second offering which we did in two years and it was subscribed quickly, so it was a very successful offering. It was backed by the United States, which also helped considerably improve the pricing and cost.

What is important is to have a stable macroeconomic situation and for that there are a number of things that are needed. One of the good indicators is the foreign currency reserves. Whenever you have a shock to the system, investors look for safer havens. So what you need is a good stock of reserves in the country which puts it in a strong position to counter any external shocks. The reserves we feel are now healthier than ever before, covering more than seven months of imports which puts us in a formidable position.

The remittances from Jordanians working outside Jordan have also seen good improvement over the last 18 months. That is another thing that has been a major uplifting factor for the country’s economy, as is the increase in tourists’ numbers and other visitors to Jordan.

How were these bonds received by international buyers?

The response to the bonds was very encouraging and affirmed the investor confidence in Jordan, notwithstanding the regional geopolitical volatility. We were pleased with the remarkable success that Jordan achieved in this international playing arena.

Who are Citibank’s main clients in Jordan, and do you see them growing in number as a result of your new commercial banking service?

We have a large and robust client base, including all the top-tier, large-size corporates that have complex and global requirements. Now with commercial banking we are expanding the universe of clients; we want to serve companies that will expand in the future, and that’s what is called the Mid-Market Enterprises (MME) segment.

Our client base during the last 40 years, year-on-year, has been expanding across all the products that we offer: treasury, working capital, cash management, and trade. So to that extent, yes, we are growing and we have a long-term positive view of the future in Jordan. We are growing faster than the GDP of the country, so if you are outperforming the economic expansion, it means that you are expanding the size of your business in a robust fashion as well as enhancing the breadth and depth of your services to your clients. The key is to be able to stay this course in a sustainable manner.

SMEs have become a major client of the banking system here, with more banks showing support by offering loans to this important segment that plays a major role in enhancing the local economy. Are there any plans to provide any offerings to them or go into retail?

Through commercial banking we have offerings now for the mid market segment, the medium enterprises, because it is important that we focus on where our strengths lie. Otherwise, if you try to do everything for everyone you will spread yourself too thin and not be able to grow in the way you would like to. The key for us is focus, followed up by relentless execution.

The natural progression from investment banking is into corporate banking, and the natural progression from corporate banking is into commercial banking. Then retail is something that we will assess in the future, but at this point we feel that our competitive advantage lies in our network, technology, globality, product expertise, and people –we will play to these strengths. Our globality and overarching network that spans over a 100 countries across all five continents is a huge differentiator which none of our competitors can match and in today’s connected world, this is a cutting edge differentiator that is becoming increasingly difficult to replicate.

Is it difficult for a foreign bank to operate here, given that you are only allowed a certain number of branches, and how do you view local competition?

The competitive intensity in the Jordanian market is high because it’s a developed market where there are more than 20 operating banks. You have global players, regional players, plus the local banks which are also very strong in terms of their ability and the products they offer. I believe that the Central Bank of Jordan has been very successful in providing a playing field where you have a lot of players who can offer state-of-the-art products, at the same time also maintain stability for the banking system to operate. If you look at the peg, it’s been in place since 1995 and it has come under threat several times, yet the stability has been sustained.

We have not found it hard at all because of the fact that our whole paradigm is based on how we can take the bank to the client, and for that purpose branches are not the only delivering mechanism. For us the important thing is to understand the requirements of the client and then bring the bank to them. In today’s world, with digitization, technology, and online banking, if you can overlay that with the physical flow of money and other documents you really don’t have a need for branches as much as you did in the past. We physically go to the client and pick the cash up from them in a secure way, then we deposit it into the bank, whatever the transaction is. You basically spin the traditional banking model on its head.

Which other markets are you eyeing in the region?

We have been in the Middle East and North Africa for over 50 years. Iraq was the first country we [ventured into] in June last year, in almost 10 years.We were also the first global bank to open there in our own name and brand because we see long-term potential. It’s complimentary to what we are doing in Jordan due to the location of the two countries.

The global banking system is under more scrutiny than ever before. How has Citibank adapted to this new reality?

Over the last 10 years, the banking environment globally has seen a lot of changes. And we have seen the regulatory environment become much more rigorous. I think in today’s world, in banking particularly given the nature of our business, the most important thing is integrity and ethics and if you don’t have them you are not going to be around. It is not something which is negotiable and it has to be embedded into every employee of the bank.

Fortunately, in the case of Jordan I can’t think of too many areas where we had any major gaps in the past, but worldwide it’s an area which is important and our focus is very unrelenting in that respect.

I believe we have a very strong reputation in Jordan, not just because we have been around for so long, but because of the fact that the people who represent us are viewed as very professional and talented. We are proud of the team we have been able to build over the last 40 years and that is our single biggest asset.