A global banking giant is looking to steal market share from National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group (ASX: ANZ).
Who Wants To Gatecrash The Bank Party?
US Citigroup Inc (NYSE: C) is the one that wants to grow in Australia according to the Australian Financial Review.
The area that Citigroup wants to grow into is the idea of supporting business customers who operate in many different countries and would like to deal with just one bank partner.
The global bank is coming after medium sized businesses. That can be a fairly wide-ranging definition, so Citi Head of Australia’s Commercial Bank clarified Alex Syhanath: “Mid-market for us means companies turning over $250 million to a $1 billion, at a domestic bank that’s kind of corporate-to-bottom-end institutional clients.”
Is Citi Targeting Any Particular Industry?
The industries that Citi will be avoiding is mining, resources and property. It seems as though Citi wants to avoid these industries because resources are cyclical and property could be an unwise choice at this stage in the economic cycle. However, every other industry is a target for the US bank.
All the major banks including Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) have operations relating to commercial banking, although ANZ and NAB earn a higher a percentage of their earnings from commercial banking compared to ANZ and NAB.
It’s not as though Citi is a large player yet in the space, it has won eight customers since February. However, these are large businesses and Mr Syhanath is talking to a number of other potential customers. Luxury Escapes and fashion retailer Showpo are two of the first.
Citi’s ideal client are ones that haven’t yet listed on the stock exchange so that it can then offer additional services to that business.
This is yet another reason why I think the big banks might not be the greatest investments over the coming years with growing competition. I’d much rather think about the reliable ASX shares in the free report below instead of the banks for my portfolio.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.