Tension in the Ukraine may be shaking up potential investors, but Citigroup is currently expanding its business in central and eastern Europe with an acquisition from ING Securities Services. In fact, the transaction is nearly complete.
Citi’s head of direct custody and clearing in Europe, the Middle East and Africa Reto Faber recently said: “While we expect the Ukraine situation to have a short-term impact on revenue, we remain confident about the positive outlook for CEE over the medium and long term.”
Citigroup’s deal includes business in several countries, among them Bulgaria, Czech Republic, Romania, Hungary, Slovakia, Russia and Ukraine. As a result, the firm claims more than 50% market share in the region. According to Faber, Citigroup is not worried about competition.
“Competition is fierce but barriers to entry are high in this business: it would be very challenging to match our infrastructure,” he said.
“We thought the time was right to buy,” he continued. “We had been watching ING Securities Services in the region for several years and had come to the conclusion that it was a perfect match for us at Citi. The business book complements ours well and we have the economies of scale required to build it further, and to give it the time and attention it needs to meet technical requirements such as those presented by T2S and regulatory demands.”
Faber added: “For every other office we already had infrastructure in place but we had to build a new direct custody and clearing capability, and that is time-consuming.”
