'2012 is likely to be a challenging year'

The following are excerpts from the interview of Arif Usmani - CEO Citibank: Business Recorder: What are the key current challenges faced by the financial services industry globally and particularly in Pakistan?
Arif Usmani: With the current European crisis and the continuing global economic uncertainty, 2012 is likely to be a challenging year for the Banking Industry. The widely accepted concept of the financial hypermarket is becoming less relevant today. Globally, the focus of most banks has shifted to an optimisation of their core businesses, rationalisation of non-core offerings and a philosophy of 'de-risking of the businesses.' The implementation of the Basel III framework embeds this concept and requires banks to build their capital strength. In Pakistan, banks are further challenged by the political volatility and security situation. This coupled with sub-optimal GDP growth and limited avenues for commercial lending, has resulted in banks investing their liquidity in Government papers. Moreover, despite the conservative lending stance, industry NPL's have increased from approximately 6% of total loans to over 8% in the last 12 months.
BR: Citi is reputed for executing landmark international deals out of Pakistan - in your opinion, what has been core to that success?
AU: The first thing that comes to mind when you think of Citi is its globality: we have our footprint in over 100 countries. No other bank has this geographic spread. Citi is like a global resource network platform where everyone has the ability to learn from each other and adapt successes as best practices. This is our key strength which we leverage to serve our clients seamlessly, as they conduct cross-border businesses in a world which is increasingly inter-connected. One of the recent examples in this regard is the landmark US$ 100 million Syndicated Islamic Financing Facility for Pakistan International Airlines, which is structured against international ticket receivables. This is the first foreign currency commercially syndicated financing for a Pakistani corporate since 2007. This sort of innovative institutional client offering remains our core expertise across the emerging markets.
BR: Citi is reputed for its lasting contributions to industry leadership/human capital in Pakistan - can you comment on this?
AU: The learning curve and range of professional opportunities at Citi are limitless and quite incredible, which is what attracts top talent to Citi. Over the last 5 decades, Citi has produced some of Pakistan's greatest industry leaders who have gone on to occupy leading positions in the public and private sectors, both in-country and abroad. Citi has contributed one Prime Minister, one Central Bank Governor and two Finance Ministers to Pakistan. In fact this is the case in many countries where Citi operates. Even amidst the recent global economic downturn, we have continued to successfully export talent from Citi Pakistan to other international Citi locations. Today, Citi Pakistan alumni are leading Citi franchises and other banks in various geographies across the world.
BR: Citi has contributed extensively to the community space in Pakistan, ie beyond banking. What has been your in-country CSR strategy?
AU: One of our key principles at Citi is 'responsible finance' - we have tried to execute that in Pakistan through a long-term, sustainable community engagement program as part of our day to day business strategy. Our focus has been on creating strong social networks and meaningful community partnerships in order to impact sustainable development. Our CSR goals incorporate on-the-ground community development and volunteer initiatives, coupled with financial investment from the Citi Foundation. We focus on three pivotal areas: microfinance, education and vocational training for poverty alleviation and generating sustainable livelihoods, with an emphasis on vulnerable groups and minorities, particularly women. We collaborate with various partners including the Pakistan Microfinance Network, the Lahore University of Management Sciences, The Citizen's Foundation, the Thardeep Rural Development Program and the Sarhad Rural Development Program to contribute to the community.
We have recently won two CSR awards at the Global CSR Summit and at the Asian CSR Awards, for our pioneering work in the microfinance and education spheres in Pakistan. Creating measurable, meaningful community impact is a core part of our strategy globally, as well as in Pakistan.
BR: What is Citi's strategy in Pakistan going forward?
AU: Over the last 50 years, Citi has been the leader in Pakistan in terms of introducing new ideas to the local market. Citi's strategy is to leverage its key strength as an innovative global institution with the 'Common Purpose' of providing meaningful value-added solutions to clients. We remain at the forefront of taking clients in Pakistan to the international capital markets and introducing new products from other geographies by adapting them to local needs.
Fundamentally, Citi Pakistan is a wholesale bank serving corporate and institutional clients - all our other offerings are designed to facilitate the delivery of services to such clients. Overall, we continue to invest in Pakistan and have been here since 1961 - 2011 was our 50th year in the country and we remain fully committed to this region. Globally, Citi marks 200 years in 2012.