There's more to Citicorp's emerging-markets strategy than a highly visible consumer banking business. The bank is also making major strides on the corporate side.
Net income from the company's corporate business in emerging markets jumped 28% last year, to $1.5 billion. That amounted to two-thirds of Citicorp's wholesale banking earnings.
"As emerging markets develop, the international banks (doing corporate banking) tend to be marginalized," chairman and chief executive John Reed said at a recent briefing on Citicorp's annual results.
"You don't keep up and you find yourself increasingly a specialized provider in the market. We are attempting to reverse that trend."
The bank is going about that challenge through an aggressive and costly campaign to "embed" itself in the cultural fabric of 75 developing countries stretching from Latin America to the Pacific Rim.
That means setting up full-fledged offices-staffed with teams of local nationals-and providing lending, investment banking, cash management, and other services. Citicorp is doing this in countries as diverse as Algeria, the Czech Republic, and Vietnam.
Other U.S.-based multinationals, including Chase Manhattan Corp. and J.P. Morgan & Co., aren't willing to go to such lengths. Instead, from regional centers they provide a narrower range of services.
"The only U.S. bank that competes in a similar embedded fashion is Bank of Boston, but they are doing it in far fewer countries," said Lawrence Cohn, an analyst with PaineWebber.
Overseeing Citicorp's corporate business in the emerging markets is Dennis Martin, a Citicorp veteran who Mr. Reed tapped for this assignment last March.
Mr. Martin, an executive vice president who reports directly to Mr. Reed, oversees the sale of various wholesale businesses, including trade finance, securities underwriting, and investment management, in addition to corporate loans.
Citicorp's share of the corporate market ranges from 0.5% to 8% in a given country, he said. And the lion's share of the business comes from local businesses in these markets, not just from multinationals that Citicorp has dealings with in the developed world.
Indeed, the bank reports that 80% of its corporate emerging markets revenues comes from locally based clientele.
"These are emerging local corporates," Mr. Reed said. "Typically, they have a big export business, which usually is the source of their economic performance."
The revenue streams emanating from the bank's emerging markets corporate business suggest how much overseas banking has lost its reliance on conventional lending revenues.
For Citicorp, the largest chunk of the wholesale revenues in the emerging markets comes from global transaction services, which includes cash management, and makes up about a third of the business.
The second largest business is foreign exchange and related money market activities, which constitute about a quarter of the division's business. The basic act of lending money produces only 23% of the revenues.
Citicorp's forays into less-developed markets, such as Vietnam, have often required upfront costs without immediate payback.
This year alone, according to Mr. Reed, the bank has budgeted an additional $75 million for this effort.
But Mr. Martin said that when building a franchise from scratch, a banker has to think about building market share rather than profits.
"When you think in terms of market share, you are thinking more strategically about where you want to end up," he said.
No doubt, acquisitions fit into that quest for market share.
Although Mr. Reed played down talk of any domestic acquisitions, he acknowledged that his company has looked at "bank acquisitions in some of the developing countries."
Citicorp, for example, is reportedly one of several banks interested in buying the Venezuelan state bank, Banco Latino.