Citigroup sets up global operation in London

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Citigroup is setting up a global commercial banking operation in London that will push into medium-sized corporate lending in the UK and Germany.

The move is part of a broader restructuring of Citigroup’s corporate bank that reflects the efforts of Chuck Prince, chief executive, to boost organic growth while streamlining the organisation.

Suneel Bakhshi, head of emerging markets corporate banking, will head the unit, which is being formed following Citigroup’s expansion into mid-market lending in the US.

Michael Klein, global head of banking, is also reorganising the corporate bank, which services the largest clients, to eliminate the distinction between developed and developing markets.

The new bank, to be headed by Michael Corbat in New York, will service large Russian or Brazilian companies in the same way it does US or European multinationals. The move partly reflects the growing size of top companies in emerging markets.

Citigroup’s Global Transaction Services business is also being restructured with client coverage moved into the new global commercial bank. The new GTS will be run Paul Galant, head of its cash management operation. Ellen Alemany, who had been running GTS, is expected to say she is taking a senior position at Royal Bank of Scotland.

The reorganisation comes as Citigroup faces continued resistance to its $13.4bn bid for Nikko Cordial, Japan’s third largest broker. Harris Associates, the manager that owns 7.5 per cent of Nikko, has rejected Citigroup’s improved offer of Y1,700 ($14.40) a share, insisting Nikko Cordial is worth at least Y2,000. Harris and three other North American funds, which collectively own about 27 per cent of Nikko Cordial, rejected Citigroup’s original Y1,350 offer.

Citigroup, which owns 4.9 per cent, raised its offer for the rest last week after the Tokyo Stock Exchange decided not to delist Nikko Cordial’s shares after an accounting scandal.

Citigroup’s bid to take at least 51 per cent of Nikko Cordial was given a boost after it emerged that Mizuho plans to tender its shares. The Japanese megabank owns a 4.8 per cent stake and is believed to have considered a bid for Nikko Cordial of its own.

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