| Citigroup in Ireland - the story so far |
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| Aidan Brady takes a historical look at Citigroup’s Irish operation and assesses the challenges ahead for the ever-evolving financial services company. |
In my role as the country corporate officer for Citigroup in Ireland, I come across many people who are surprised at the size of the Citigroup operation in Dublin. Many of these people, mainly non-financial based, are amazed to find that Citigroup employs over 1,100 employees in Dublin and are even further astonished when I tell them that the bank has been in Ireland for over 37 years. Maybe we are poor at marketing our contribution to financial services, but in any event, I think the real issue is that the media and general public do not fully understand financial services and the IFSC in particular.
‘It was our sense that our future lay in innovation and looking outside of Ireland to the internationally traded sector’.
The fact is that Ireland’s financial services industry has become one of our most significant industries and it has been developed over a relatively short period. Let me illustrate this by sharing with you Citigroup’s experience in Ireland. That story begins back in the 1960s when many of our US based multinational customers came to Ireland at a time when international trade and development overseas had become the business trend. Due to the incentives being offered by the Irish authorities, many of our customers were setting up manufacturing facilities for pharmaceuticals, healthcare and general industrial products. They required the services and expertise of an international bank, which could provide foreign exchange, loan and trade facilities. In May 1965, the First National City Bank of New York (as Citigroup was called at the time) opened its doors for the first time in Dawson Street and relocated shortly afterwards to St Stephen’s Green.
To many of you, the bank’s offices at St Stephen’s Green until the early 1990s were a familiar sight. When I joined the bank in 1985, as a corporate relationship manager, the bank had a well-established client base and strong range of products. This was the first international company I had worked for and the feature that most struck me at the time was that of ‘change’. Our parent company, then called Citibank, N.A. (renamed from the First National City Bank of New York in 1977) had become an ever evolving business, constantly reviewing and developing new ways of delivering financial products to serve our customers and rapidly expanding operations around the world.
When I was appointed country corporate officer of the bank in 1992, that entrepreneurial ethos was being applied locally and we had already begun to create locally developed products based around the IFSC. Indeed, we were the first company to establish an agency treasury offering, one of the hallmark products of the early days of the IFSC. In 1993, we took a strategic decision to relocate to the IFSC.
‘It is interesting, that despite the very difficult economic worldwide environment, I don’t think I have felt more optimistic about our position. Perversely, the tougher times get, the more compelling are Ireland’s advantages’.
While some of our new products and services required us to be located in the IFSC, to fulfil license requirements, the majority of our business was traditional in nature and did not require that physical move. However, it was our sense that our future lay in innovation and looking outside of Ireland to the internationally traded sector. This ‘leap of faith’ move to the IFSC has proven to be a great success for us. When we moved into IFSC House in 1993, we had 80 employees, by the time we had built our own building in 2000, we had over 1,100 employees.
What led to this exponential growth of our operations? The simple answer is the overwhelming advantages that Ireland offers to financial services operations locating here and the desire and success of local management and staff to market those advantages consistently to their overseas colleagues. The advantages are well known - tax, well-educated workforce, relatively low cost environment and business friendly proactive government agencies and regulatory authorities. Of course, the other major element needed is a customer who is in a position to take advantage of the advantages! With Citibank/Citigroup we are lucky in that we operate off a platform which is the largest financial services company in the world, with all of the marketing advantages that offers. We were also lucky, such as in early 1996, Citibank was looking to centralise many of the operational functions for its cash management business from across Europe into one location. Ireland, for the reasons stated above, was one of the locations under consideration. The bank undertook a feasibility study and the results proved conclusive, Ireland was the most suitable location for a new regional processing centre to be called the Dublin Service Centre. Up to 300 jobs were to be created.
‘The challenge will be to attract the ‘front offices’ for much of what we have been supporting through our back office operations over the last seven years’.
I, and the rest of my colleagues in Ireland were delighted at this announcement and the prospect of the creation of the Dublin Service Centre. What we were not prepared for, was the enthusism with which our Citibank colleagues embraced Ireland as location for centralising many of the activities of our global products. At first there were 300 new positions, then 600 and then 900. We had become the preferred location in Europe for centralised Citibank corporate banking activities. By 1998, we had so many new employees that the bank had five different office locations in the city centre. We decided that it was time to locate all our activities into one building facility. This new facility would be able to house all our employees and allow for further expansion. At the time, the second phase of the IFSC was coming on stream. A 12 acre extension beside the original IFSC was being developed. After considering the other available locations for the size of the Citibank operation in Ireland, we selected a 2.2 acre site in the second phase of the IFSC. We started constructed on our 375,000 sq. ft building in May 1998. It would be the largest office block to be built in the IFSC. We had come a long way from our small office in Dawson Street in 1960’s.
I have described earlier, how the Dublin Service Centre was established but have not explained the different types of activities carried out. Essentially, our Dublin Service Centre supports the operations of the products in our cash, trade and treasury services business and those products in our Global Securities Services business. It is not possible in a short article such as this to cover the numerous processes, functions and services provided by these businesses but the following statistics demonstrate the diversity and complexity of this operation:
• 17 jurisdictions are covered
• 1.1 million Euro denominated transactions per month averaging ?120 billion per day
• Three million USD denominated transactions per month averaging US$750 billion per day
• 12 different languages are serviced by our customer service representatives
• securities payments are collected from 73 markets around the world
While the opening of the Dublin Service Centre was a milestone in the development of Citibank in Ireland another event took place in 1998 which was to change the face of the financial services industry world-wide. In October 1998, Citibank and the Traveler’s Group merged to form Citigroup - it was the largest merger in history at the time. In Ireland, we were not directly impacted by the merger until 1999 when Salomon Brothers International Limited set up an equities sales operation in Dublin and this was followed by an investment banking advisory service a year later. The merger also brought Primerica, the insurance arm of Citigroup to Ireland. In 2000, Citilife Financial Limited was established in Ireland with the purpose of underwriting life assurance polices which are sold into the European market.
By now, Citigroup in Ireland had become the largest foreign bank in Ireland and the fourth largest Citigroup operation in Europe by employee number. As well as becoming part of the global market through our Service Centre, we have benefited from the merger of our parent company and we hold the unique position in our company in Europe (outside of UK) for having the most diverse mix of Citigroup businesses in one location.
So, what now, in 2003, do we see for the development of Citigroup, in Ireland? It is interesting, that despite the very difficult economic worldwide environment, I don’t think I have felt more optimistic about our position. Perversely, the tougher times get, the more compelling are Ireland’s advantages. Our employment costs might have risen more rapidly than other locations, but counterbalancing this, we have built, in the IFSC, a strong pool of experienced talent. The challenge will be to attract the ‘front offices’ for much of what we have been supporting through our back office operations over the last seven years.
With this aim in mind, on May 1st 2001, the Central Bank of Ireland approved and issued a banking licence in the name of Citibank Ireland Financial Services plc (CIFS). CIFS actively promotes Ireland as an ideal location for product innovation and delivery. This month we implemented the move of our first major product to CIFS. The product is Worldlink and is simply described as a ‘corporate travellers cheque’. It is sold and distributed internationally and is a significant revenue and profit contributor to Citigroup. Hopefully, this product move will be the first of many over the coming years. Finally, in my view Ireland’s advantages are stronger than ever, the financial services community merely need to market that message. |
Aidan Brady is county corporate officer with Citigroup Ireland and is also the current President of the Institute of Bankers in Ireland.
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