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Citi (C) Strategizes to Propel UAE's Offshore Booking Center

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Per Reuters, in order to fortify its regional growth, Wall Street biggie — Citigroup (C - Free Report) — is planning to propel offshore booking center in United Arab Emirates. Moreover, the bank applied for a banking license last year in Saudi Arabia and is working to get the same, in a bid to capitalize on the country’s financial reforms.

Atiq Rehman, Citi's chief executive of the Middle East and Africa, stated that this region is likely to record growth above the market average of 4% in 2018 and 2019, positively impacted by both countries. Notably, in the Middle East and Africa, Citigroup serves 25 markets, the region contributing approximately 7% to the bank’s global net income.

"We are focused on what we can do within the UAE and very focused on what we can do from the UAE," he said. "We want to grow our business here and make it into a regional offshore booking center for a lot of our loans," Rehman noted further.

Growth Prospects

Particularly, the move comes on the heels of the increased usage of the UAE as a center of business in the Middle East and Africa by the bank's multinational corporate clients. Citigroup has notably recorded incredible growth since a year or two ago when it started booking loans from the UAE.

"Instead of London and New York we are booking them here as there's a lot of benefit from doing so because of costs, time zone management and there's a good set of regulations here," Rehman added. He also said, "My vision is to turn the UAE into a proper booking center for all sorts of transactions, not just for loans but derivatives, trade and all."

Per Rehman, increased projected opportunities post Brexit will help boost Citigroup's offshore booking business in the UAE. Moreover, the bank will be exposed to other profitable transactions in the region. Further, more prospects may come up from Saudi Arabia which will propel growth in the Middle East and Africa.


Notably, in 2004, as part of Citigroup’s strategy to focus on countries where it could control a majority stake, the bank sold its 20% stake in Samba Financial Group to Saudi Arabia’s Public Investment Fund for $760 million. Hence, the company lost a key banking license, straining the bank’s activities in the country.

In 2015, the company won a license to trade in Saudi equities, while, in 2014, it played an important role of being the leading advisor on the country’s first international bond sale. In addition, Citigroup has provided more finance to the borrowers in the country as compared with other banks like JPMorgan Chase & Co. (JPM - Free Report) and Deutsche Bank AG (DB - Free Report) , which operate in this region.

Additionally, this January, the bank received approval for initiating investment banking operations which led to cater more advisory deals and other business in Saudi Arabia.

Our Viewpoint

We expect to see a boost in Citigroup’s activities if it grows offshore booking center in UAE and acquires the license in Saudi Arabia. The bank has also been making immense efforts to streamline operations internationally and manage expenses.

Over the past six months, shares of Citigroup have rallied 3.5%, as against the 0.9% decline of the industry.

Currently, Citigroup carries a Zacks Rank #3 (Hold).

A better-ranked company includes LPL Financial Holdings Inc. (LPLA - Free Report) , which has been witnessing upward estimate revisions for the past 60 days. Also, the company’s shares have gained nearly 11.6%, year to date. It flaunts a Zacks Rank of 1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

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