Citibank Vice Chairman Alan Macdonald: "One Belt Along The Road" Business Growth Exceeds 30%, Private Capital Leveraging Is The Key.

Participation in the "one belt and one way" initiative is bringing rewards to foreign banks.

"In the past 12 months, Citigroup has achieved a 30% increase in the related business of" one belt and one road ". Its growth mainly comes from business and investment banking, cash management, trade financing, foreign exchange business and so on. Citigroup has also expanded its market share by benefiting from more active customers and increased business. " Recently, Citibank vice chairman, Alan MacDonald, said in an interview with several media outlets, including the twenty-first Century economic report, that he first participated in the "one belt and one way" International Cooperation summit two years ago, and regarded it as a very important business opportunity and regarded it as an important growth strategy for Citigroup.

Citibank vice chairman Alan MacDonald (data sheet)

Alan MacDonald has been in Citigroup for 44 years, and is also the chief customer officer of Citigroup, in addition to vice chairman. In late April, he participated in the second "one belt and one way" International Cooperation Summit Forum on behalf of Citigroup, and then interviewed several media.

In the view of Alan MacDonald, there is a debt crisis in some countries along the belt and road. To control the public debt pressure of the countries along the border, it is necessary to attract more private capital participation.

Establishment of "one area one" business supervisor

"Two years ago, after I took part in the" one belt and one way "summit, I thought it was a very important business opportunity. At that time, only 60 countries were involved, and Citigroup had operations in 56 of them. Alan MacDonald said that after the meeting, Citigroup organized a meeting to invite local Citigroup leaders and business executives in more than 30 important countries along the "one belt" road, and invited more than 250 business customers to participate.

"At the meeting, we introduced the trend, opportunities and risks to Citigroup in these countries and regions, and the products and services provided by Citigroup were from a geographical perspective. At the same time, we also invited product experts to introduce customers from the product solutions, how to support and meet the business needs of customers, through this activity, we can well integrate customer needs in the geographical and product. Alan MacDonald said that the communication with customers at the conference two years ago laid a strategic emphasis on Citigroup's "one belt and one way" strategy. "Then we held the" one belt and one road "activity day in every key country and every country, and our local team conducted in-depth exchanges with our customers in the event.

Citigroup has covered more than 100 countries and markets.

In addition, Citigroup set up a new position in September 2018, which is Citigroup's "all in one" business head. Li Beibei, head of the overseas business department of the former Citigroup, is responsible for integrating internal resources and coordinating different account managers to help Citigroup produce more output in the "one belt" business.

Li Beibei said that Citigroup currently has 11 overseas Chinese enterprises China Desk in the global market, of which 10 are located in the "one belt and one road" countries.

"Over the past year, we have held" one belt and one road "activities in key countries, including South Africa, Cameroon, Nigeria, Pakistan, Russia, Kazakhstan and so on. When we integrate China's general strategy with the local authorities, we can connect the global network. Li Beibei said.

Activating private capital to deal with excessive public debt

Since last year, some countries along the belt and road have been frustrated by related debts due to higher debts, which has led to worries about the debt trap in the international market.

In this regard, during the second summit forum, the Ministry of Finance issued the "one belt and one way" debt sustainability analysis framework, encouraging Chinese financial institutions to jointly build "one belt and one road" state and international institutions to use this tool voluntarily, improving the scientific and technological level of debt financing and debt management, and achieving sustainable and inclusive growth. This is seen as a response to the question of "debt trap".

"What was repeatedly mentioned at this year's meeting is" giving full play to the role of private capital ". Alan MacDonald said that at present, there are a lot of capital needs in infrastructure construction around the world, but there is a big mismatch in the supply of funds. "The difference is not just the requirement of public capital, because public capital will be used up sooner or later, or there will be debts. The ratio of debt to GDP can not be too high, and many countries along the belt and road have debt crisis. This reminds us that we must make use of private capital and revitalize this part of our capital."

Alan MacDonald said that the financing mode of the "one belt and one road" project is usually short term bank financing + long-term capital market financing. "Banks can provide short-term construction financing, and subsequent project financing needs can meet the needs of long-term investors through structured credit and other credit enhancement methods, such as issuing project bonds. In the capital market, Citigroup's role is to pull strings for projects, and find long-term institutional investors such as insurance and pension funds."

"From the perspective of risk preference, institutional investors, especially insurance companies, information management or pension funds, hold large amounts of long-term capital. Many of them have twenty or thirty years' time to invest in long-term investments, and have a demand for returns. They must find long-term matching projects in order to get a certain return." He said that at present, the bond maturity in China is mostly within ten years, which is not enough to meet demand.

"In January 2019, Citigroup completed the PT Banten project bond in Indonesia, which was refinancing of project debt, with a period of 775 million dollars and 20 years. This is one of the future directions of "one belt and one road" financing. Li Beibei said.