You belong to the Citi

Sławomir Sikora, the new president of Citibank Handlowy, is bullish on Poland's long-term place in Citigroup's global strategy. The bank's deputy vice president, Sunil Sreenivasan, goes even further and says that the coming years will be the era of central Europe. Timothy Sifert reports.

Some three weeks after Sławomir Sikora took over as president of Citibank Handlowy from Cezary Stypułkowski, who left the position to become president of state-owned insurance giant PZU, Sikora's boss of bosses, Sanford I. Weill, announced that he would step down as chief executive of Citigroup, the world's largest financial services firm and the parent company of Citibank Handlowy.

But while Wall Street analysts debate whether Weill's move will produce any substantial changes for Citibank, Sikora and his deputy vice president, Sunil Sreenivasan, who is also Citigroup country officer for Poland, set out during a recent Business Journal interview to inject a bit of certainty into local operations, and to explain that Poland is fast becoming a key component in the financial giant's global empire.

"The merger is over ... and now we can focus on business growth," Sikora said.

In 2000, Bank Handlowy w Warszawie signed a merger agreement with Citibank SA, and, Sikora says, it took nearly the entire time since then to merge the different business cultures, combine back-office information technology and foster Citibank's global product range to suit Poland.

Now that the merger is "over," Sikora and Sreenivasan - the latter a resident of Poland for three months - are designing the future of the bank as it heads toward what they consider to be a lucrative European Union membership, an improving local economy and - whatever recent evidence might suggest - the government's warming up to potential foreign direct investors and privatization.

Sikora begins to sketch out Citibank Handlowy's great domestic potential, saying that its global brand name and product line position it well with customers. He also adds that his tenure as head of the banking and financial institutions department at the Finance Ministry (beginning in 1989), at First Polish-American Bank and, finally, his seven years responsible for corporate and investment banking at PBK has readied him for his new position.

"This combination is one of my major assets," he says.

Sreenivasan arrives at the interview roughly 20 minutes after Sikora began talking, and enters the conversation. He becomes histrionic as he discusses Citigroup and its perception of Poland as an investment target and banking hub. His well-polished sales pitch for the country underscores the global importance of Poland for Citigroup.

"If you were to draw a vertical and horizontal line across Eurasia, it would intersect somewhere around Poland," he says. Banking businesses thrive on intersections, hubs and networks, he points out, adding that Poland is fast becoming better situated as an important hub in Citigroup's European network - a position, if further developed, that could designate the country as the central processing area for Europe.

"This is the era of central Europe," Sreenivasan says. "The last decade was the era of Asia. Maybe the next decade will be the era of Africa, but this is the era of central Europe. Growth potential here for the next 10 years, I think, is going to be in the high single digits if not in double digits, maybe after the turnaround. This is a transit country where you have Russian (financial) flow through into the EU. EU (money) flows through into central Europe and Polish (money) flows in and out of the country. The potential here, from Citigroup's perspective, is much greater than in Asia."

Focus on retail

One of the cornerstones of the Citibank Handlowy strategy is to further develop its retail banking division, Sikora says, mirroring very much what other local banking houses are doing, though maybe with a difference in scale. He points out that, at present, the firm controls about 60 percent of the growing credit card industry here, numbering about half a million customers.

"We are a universal bank, so we can provide services in all segments," Sikora says. "That includes corporate banking ... but also we are very strongly developing the retail business within the consumer bank."

The bank's ambition also includes benefiting from foreign direct investment, which both Sikora and Srineevasan expect to grow, owing to that cure-all, EU entry, and recent positive signals for investors from the current administration, among them an 8-percent cut in the corporate income tax rate.

"We want to take advantage of the upcoming economic recovery," Sikora says. "GDP expectations are almost 3 percent, as opposed to the beginning of the year when they were 2.2 percent. Last year it was 1.4 percent. That's a clear indication that the economic recovery is here. Next year projections are reaching (a) 4.5 percent-plus level."

Investors, he says, are keeping their eyes peeled for this kind of recovery. "Poland in the EU will mean more FDI," he adds. "Why? Because we will be a member of the EU, but at the same time, we have highly-skilled people who still are relatively competitive in terms of EU salaries. And foreign direct investors are a natural client for Citibank Handlowy."

He does allow, though, that the status of FDI is not completely rosy. "We have not had the best track record in terms of (how) the government (treats) foreign investors," he said. "I don't want to mention them because it's the past."

Strategic location

Sreenivasan compares Poland to some of the other regions where he's worked in financial services. "We view Poland for its centrality, for its low-cost availability of people and resources, for its intrinsic size compared to the surrounding countries (which makes it) a natural hub," he said. "Hence, not only have we invested in it for its size, but also chosen to locate certain regional processing centers here in which we have a regional, even a global, ambition. We have a processing center in Olsztyn, which is currently processing Polish (transactions) and which is imminently to process central European transactions and could easily end up being the processing center for Citigroup in Europe."

Sreenivasan compares Poland to Singapore, a market in which he's recently worked. Poland, he explains, is a better market in terms of fewer regulations regarding foreign ownership of financial institutions, but also in terms of its comparatively under-penetrated banking sector. "Here it's wide open," he continues.

Sikora comments that Bank Handlowy and Citibank had been going toward a general growth strategy before he came aboard, but today there are more resources available, given the full integration of the two banks.

Sikora is humble about his new role at Citibank. Given his short time as the head of the company, he admits he does not yet know everything there is to know about the bank. "After three weeks it would be premature to give you the full strategy of our bank," he said. "That would be like the guy who works for one day and says he knows everything. I want to avoid that."