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CITIGROUP has bolstered its balance sheet and is well-armed to take on the challenges ahead as the global economy improves, said chief executive Vikram Pandit, who was in Singapore recently.
The key step in reinforcing its structure came last week when it completed a stock exchange offer with the United States government.
Mr Pandit told The Straits Times that the move boosted its balance sheet to the tune of US$58 billion (S$83 billion) while handing the US government a 34 per cent stake in the bank.
It also means Citigroup will have about 12.7 per cent in tier one capital, he added.
'That is incredible financial strength and it's an important milestone in the sense that it puts the issue of our capital financial strength behind us,' he said.
The New York-based banker outlined his restructuring plans for the group, which seems to have turned a corner recently. It has reported second-quarter profits while reducing expenses and headcount as well as sold off riskier assets.
Citigroup also cut about US$16 billion in expenses worldwide, which amounts to a quarter of its total cost structure.
'We have done a pretty good job in the first two quarters this year where we did report profits. We got there with a lot of hard work over the last year, particularly in the fact that we reduced our assets by almost 25 per cent,' said Mr Pandit.
'And when you combined all of that, it had the cumulative effect of getting us to positive numbers in the first couple of quarters but the short-term goal remains sustainable profitability.'
He said Citigroup was still at risk from its exposure to consumer credit card and mortgage debt in the US.
'The US consumer credit situation is not great yet, although we are seeing some improving signs, but that too will pass,' he said.
He added that Citigroup remains a strong global franchise with 'incredible earning power in a normalised market'.
'We clearly have more than enough capital to face a lot of things that can be thrown at us and our goal is to earn our way out of this on a sustainable profitability basis but there are still some challenges ahead of us.'
Citigroup reported US$4.3 billion in net income for the second quarter on revenues of US$30 billion.
The result was boosted by an US$11.1 billion pre-tax gain on the sale of its stake in brokerage firm, Smith Barney.
'We aren't finished. As a matter of fact, we still have plenty of assets that we need to wind down and rationalise over time but there's now strategic clarity as to what our core operating businesses are going to be,' said Mr Pandit.
'Clear strategy and clear focus start by understanding what you're good at; what's our DNA.'
He said restructuring plans will focus on driving retail, consumer and securities banking - including investment banking - and its financial services business.
The group's international franchise - its Asian units recorded a first-half net income of US$2.8 billion - will also continue to feature strongly in its new strategy, said Mr Pandit.
'I don't think it will be surprising to anybody that a large portion of growth in the world is going to come from emerging markets,' he said.
'We serve multinational companies (and) we have a lot of companies in the US which all want to access Asia as markets and we're here to help them.'
He said that Citigroup will continue to help promote the US economic recovery, adding that the US 'is still the engine that can help the world'.
'We have been very active in the markets to lend, and so we've been doing mortgages, doing credit card loans, obviously, student loans, auto loans, things of that sort as well, but the general background is, again, making sure we're making prudent loans.'
Mr Pandit remained unconcerned about the US government holding a 34 per cent stake in the bank.
'Ultimately, our common goal is to make sure the bank is extremely strong, it's very profitable and I hope they make a lot of money on their ownership interests. But we are responsible for our management,' he said.
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