INTERVIEW: Like its local and foreign peers, the US subprime crisis has had a direct impact on Citibank Taiwan. But the lender prides itself on being at the forefront of asset allocation and has seen no decline in investment activities by its clients, Victor Kuan (管國霖), country business manager of Citibank, said in an interview last week.
“The global economic slowdown, plummeting international stock markets, raising oil prices and the ensuing inflation all have negative impacts on investment and consumption,” Kuan said after the inauguration ceremony for a Citigold center in Jhongli (中壢), Taoyuan County on Friday.
But as many Citibank clients are reallocating their investment assets — as they did in the previous economic downturn — the bank has not observed any decline in investment activities to date, Kuan said.
The bank also offers multiple lines of products to even out its revenue stream in different economic cycles, he said.
Rather than being product-centric, Citibank offers six major lines of investment vehicles: mutual funds, fixed income, US stocks (and ETFs), insurance, multiple currency deposits and structured products.
Depending on where we are in the economic cycle, “different product lines become more popular than others,” Kuan said.
Right now, clients are interested in principle preservation with steady growth, hence fixed income and anything fixed-income related are popular, including bond funds, certificates of deposit (CDs) and multiple currency deposits. Insurance products with an investing element as well as US stocks and ETFs are also preferred.
Last year, Taiwan witnessed a 196 percent insurance rate. In other words, on average, there were two policies per person.
“Taiwanese people are using insurance policies as an investment arm as well as a savings plan,” Kuan said.
Monthly premiums are more affordable to the average citizen than a lump sum up-front deposit, he said.
In a recent promotion effort, Citibank Taiwan also partnered with New York Life Insurance Taiwan Corp (紐約人壽) to provide credit card rewards programs with usable points going toward premium payments.
“Recent quarter-over-quarter figures show that Citibank credit card business is actually improving.” Kuan said.
There is also a concerted effort to boost wealth management business at the bank with the launch of Citigold Global Banking last month. Citibank is creating a global network for clients traveling and working outside their home countries.
Multi-country pre-account opening and funds transfer, credit transportability and a toll-free global hotline are just some of the perks associated with being a Citigold member, the company said.
Similar to the product lines smoothing out revenue flow, different business lines also help stabilize the bank’s financial health. However, Kuan is realistic when it comes to bank performance in times of economic slowdown.
“I suspect the second half [of the year] will be more difficult than the first,” he said.
Kuan said investors should not be discouraged by recent market movements, but stressed that it was crucial to actively set a side a portion of monthly income toward investments and build up positions slowly.
Most importantly, he discouraged investors from chasing after hot stocks or hot markets. Over time, there is a tendency for investment vehicles and markets to revert back to the mean to reflect reasonable growth, he said.
“So what market and stocks do you think are overly hyped? Be cautious with those,” he said.
When asked about new foreign banks entering the Taiwanese market and their potential alliances with local banks, Kuan simply said: “Citibank has been in Taiwan since 1965.”
“The banking industry is an industry of trust. Some other outfits might lure customers with innovative products or superb returns, but savvy investors know a long-term relationship is the key to a successful banking relationship,” he said.
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