Citibank shielded from storm

The latest round of the US financial turmoil over the past four days has given most bankers a lot of sleepless nights. But for Peter Eliot, manager of Citibank Thailand, business is as usual.

"We're proud of our bank for a number of reasons during this time because we're strong on the capital base, on the deposit base and on operating-income generation capability. We are doing business in more than 100 countries with a diversified portfolio," Eliot said.

Citibank had taken the necessary steps earlier on to strengthen its financial position and enjoy one of the best credit ratings in the banking industry.

In the fourth quarter of last year, it raised US$50 billion (Bt1.4 trillion) in fresh capital by attracting institutional investors including the sovereign funds of Abu Dhabi, Singapore and Kuwait. Citibank's stockholder equity totalled $137 billion as of last June.

Eliot said Citibank had also emerged as a key participant in the US financial markets over the past few days by providing short-term liquidity to the institutions facing a credit squeeze.

The local Citibank office also finds very few customers calling in to ask about the bank's financial position, he said.

"This is not a surprise to me in any way. They are not concerned at all," he said.

Locally, Citibank is into universal banking, with scores of bankers, lawyers and businessmen claiming to have started their career at the institution.

The events unfolding so far are quite spectacular, with the US Federal Reserve injecting $85 billion for almost 80 per cent in American International Group.

US authorities have refused to bail out Lehman Brothers, letting the Wall Street investment bank collapse and declare bankruptcy. Bank of America has taken over Merrill Lynch, another major investment bank, for $50 billion.

Eliot said it was difficult to predict when the US shakedown is going to be over, but he expects the volatility to continue well into next year.

He praised both the Fed and Treasury along with other US financial institutions for doing everything they can under the circumstances to help stabilise the financial system.

The fact that the Fed has kept its interest rate unchanged reflects its view that the financial mangling is going to be contained and that authorities still need to keep an eye on inflation, he said.

The banking system here is likely to slip through the global financial turmoil unscathed because it has been managed with prudence, with both bankers and regulators learning a hard lesson from the financial crash of 1997, he added.