In what seems to be frank talk, the director of the Shanghai branch of the China Banking Regulatory Commission, Yan Qingmin, told The Wall Street Journal that Citigroup (NYSE:C) should expand its operations in Mainland.
Citigroup’s China unit was “very prudent and careful” during the financial meltdown and now should be “expanding, absolutely,” Qingmin said.
“Showing an unusual willingness by a regulator to comment on an individual company, Mr. Yan offered a glimpse into how China views the recent overhaul of the U.S. financial system and said Citigroup should take advantage of growth in the Chinese economy and expand in the world’s most populous nation.” [WSJ]
Qingmin’s comments also suggest the U.S. government’s 34% stake in the bank, amassed after offering $45 billion in support this year, isn’t an issue either for the Chinese regulators.
The potential that China’s economy holds as it progresses to a more liberal market economy is certainly limitless. However, over the past year, Citigroup has expanded in China, but not as much as other foreign banks. According to Qingmin, at the end of June, its loan-to-deposit ratio of just $6 in loans for every $10 in deposits was among the most conservative in the industry.
A Citigroup spokesman in Shanghai declined to respond to the regulator’s views. Instead, the firm issued a statement saying that “China remains one of Citi’s top priority markets anywhere in the world.”