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| Citibank Korea's Director at Retail Banking Division Kim Ji-kang / Korea Times photo by Choi Won-suk |
By Anna J. Park
Citibank Korea has been focusing on providing innovative digital banking and differentiated wealth management strategies to clients since it started streamlining operations by closing about 80 percent of its regional branches in 2017.
Currently, the bank operates eight Wealth Management Centers ― four in Seoul, one in Bundang, and the rest in provincial locations, providing various model portfolios and effective team-based advice to clients.
The wealth management centers have shown resilient growth in the number of new clients, investment and deposit volumes over the past couple of years. In addition, the bank's medium-risk Moderate Model Portfolio produced a 17 percent return, while the high-risk Aggressive Model Portfolio posted a 20 percent return in 2019.
During a recent interview, head of the Retail Banking Division Kim Ji-kang discussed the factors that led to the lender's success and impressive wealth management model portfolio results, and what distinguishes them from those offered by other banks.
As a graduate of Korea University and NYU's Stern School of Business, Kim joined Citibank Korea in 2005 and has been leading the wealth management division since early 2018.
"First is our global network. This may seem like less of a differentiator as many local banks also offer products invested on a global scale. However, the true value of our global network stands out when we dive deeper into the holistic processes related to developing our product and asset allocation strategies," Kim said.
"As an example, to onboard a new investment product, there are multiple layers of due diligence, involving both local and global expertise, ensuring the products that we offer are aligned with our market view and the respective investment themes. The rigor, breadth, and the talent behind our investment strategies are attributes that cannot be easily replicated," he continued.
According to him, Citibank Korea's wealth management advice is based on reports and insights from the bank headquarters' Global Investment Committee, chaired by the most senior investment strategists and chief economists, supported by 14 committee members with professional experience spanning 45 years.
"The committee publishes our Investment Strategy Reports, prepared by four distinctive teams specializing in each geographic region. In addition to geographic coverage, the committee is responsible for industry and sector analyses, assessment of geopolitical issues, and ultimately our asset allocation strategies," Kim explained.
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| Citibank Korea Retail Banking Division Director Kim Ji-kang speaks during a recent interview with The Korea Times. / Korea Times photo by Choi Won-suk |
The retail banking chief also pointed out that the bank's "open architecture" as an independent distributor, without any affiliated institutions unlike other major financial groups in Korea, allows the bank to offer trusted and responsible services in the best interests of its clients.
Portfolio-based strategies
The bank's organizational segregation of product teams from the sales department also enables objective assessment of their wealth management strategies.
"Our wealth management business does not operate under a single hierarchy, as each product and sales teams reports independently to their respective managers. Furthermore, a team of investment professionals ― Portfolio Counselors ― sit independently from the sales organization. This dedicated team of experts are responsible for providing regular portfolio reviews for our key clients from an objective, third-party perspective, unhindered by any sales goals, as their performance is based on the number of quality reviews they provide for our valued clients," he emphasized.
When asked about specific investment strategies, Kim said the key lies in diversification and portfolio-based investing.
"We believe the key difference Citi brings is having the systematic capability to be disciplined in adhering to the portfolio-based approach, or our model portfolio solution. As mentioned earlier, the best experts in the financial industry sit within the Global Investment Committee, and regularly monitor our asset allocation strategies, providing timely updates as needed," he said.
"In addition, the Citigold Diversification Index (CDI), an internal index that evaluates product and asset concentration risks, is embedded in the PBs scorecard as an extra measure to invest alongside our asset allocation strategies," he added.
The veteran banker also shared the bank's strategy dealing with the negative impacts from COVID-19.
"Due to the unprecedented spread of COVID-19, we've decided to take a more conservative approach by lowering our equity allocation to neutral, while remaining positive in the high quality fixed income space with a focus on US Treasuries," Kim said.
"Considering the short-term downside risk in the markets, Citi is long on safe haven assets such as U.S. Treasuries and gold. The spread of COVID-19 weighs down more heavily upon economies that are reliant on global trade, such as [Korea's]. Allocation to safe haven currencies, such as the U.S. dollar and yen, also provides portfolio protection, as bearish investor sentiment could lead to depreciation of the Korean won," he added.
