The network that moves emerging – and global – markets..
World Bank NASDAQ C
| FY 01 Sales | $112 B
| FY 01 profit | $14.1 B
| Market cap | $224 B
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When the Mexican banking house Banamex came up for sale last year, it presented a tempting target: high potential upside with relatively low risk, thanks to Nafta and President Vicente Fox's deregulation push. The usual banking sharks sniffed around, but only Citigroup could stomach the $12.5 billion price tag. In a single bite, the world's largest financial services firm became the biggest bank in Mexico.
For Citigroup, which has a $224 billion market cap – nearly triple the size of its closest rival HSBC – Banamex wasn't merely a south-of-the-border snack. "Looking at the next 10 years, most of our growth will come from outside the US," says vice chair Deryck Maughan, the firm's M&A chieftain. Already, Citi does business in more than 100 countries, 80 of them emerging markets, and Maughan is targeting a dozen of those as sites for Banamex-style acquisitions. "If you want to go global, you might as well go global with the biggest," he says. "Two-thirds of the deals we do originate with an incoming phone call."
Citigroup can afford to concentrate on the rest of t he world because it already dominates the American financial food chain in everything from consumer credit cards – they're the real currency of ecommerce, and Citi's the number one issuer – to top-tier investment banking, via subsidiary Salomon Smith Barney. Its US focus is now on develop ing information-intensive financial services – like CitiDirect, a corporate-banking Web app that allows multinationals to break down their books globally, regionally, or locally in real time.
Like any financial firm in any weight class, Citigro up could be hurt by rising interest rates or inflation; it's also been named codefendant in an Enron shareholder lawsuit. But even in 2001, it increased its profits to $14.1 billion, tops for the entire Wired Index. In a business where the ultimate asset may be the ability to handle risk , Citi's size matters.
