Citi Sleeps

Citi is not supposed to sleep. But it is not true, anymore. Citi has started to doze off. The Capitalist US had to turn socialist and help Citi with huge package to protect its $306 bn risk assets, in one of the largest bank rescue acts.

Obama says, having China as banker to US Gov’t is not good for their economy, global leadership and financial security. As per the latest statistics available, 20.45% of US treasury securities are held by China (as against 0.5% by India). It is not China alone but a large number of developing and developed countries that have actually propped up the US financial system by investing in the US and the dollar assets. The US deficits running into trillions of dollars are financed by these counties and US is the largest debtor nation today.

Look at Citi’s operations in India. It is growing at 24% even in times of such unprecedented financial turmoil across the globe. Citi’s operations in India are not only profitable (Citi doubled its profits during 2007-08), but it is achieved with less than 1.5% of non-performing assets in its books; an enviable state of affairs for an unhealthy monolith’s well managed operations in one oasis. The credit for this should be equally shared by the bank’s Indian management and the Indian Financial system regulator, the RBI.

The US is the most regulated economy and still has the largest number of bank failures involving some of the Giants in the financial world. Regulation alone cannot achieve what prudence and financial conservatism can do. Even in the worst crisis affecting the East Asian counties in the late 1990s, India remained largely unaffected, because of the prudent policies pursued by RBI and Gov’t of India.

Footnote: Perhaps the day is not far off for the Federal Reserve to seek advice from RBI

About Bankers

Bankers belong to a unique species who will behave in a peculiar manner wherever they are and howsoever irritating it is for others. He will talk always about banks and banking irrespective of the occasion and whether his friends enjoy the 'discourse' or not. There are again classes of bankers - one who is always critical of his bank, thinks everything is wrong with his bank and every other bank does things the right way; some one else thinks he is discriminated against and denied promotion' though he deserves the most, the other fellow should not have been elevated despite being a great performer because 'I' don't like him and so on. There is more pride and prejudice than banking in many bankers. Run of the mill stuff.

Of course there are great bankers too; who think what is good for the bank, good for the employees and customers and for the society at large, They go on to become the change agents for banking. They are the ones who made banking and banks so great (particularly in India, in the present day scenario), less risky and more and more customer friendly. Let this species thrive.

Footnote:He includes she, of course