KKR Snares Citi’s South Asia Chief

MUMBAI/HONG KONG (Reuters) – Citigroup’s (C.N) South Asia Chief Executive Sanjay Nayar has quit to run private equity firm Kohlberg Kravis Roberts & Co’s new Indian unit, leaving the struggling bank after a 23-year career.

Nayar’s departure from Citi had been rumoured for some time, and comes as the U.S. banking giant faces a severe crisis in confidence. Its stock fell 23 percent on Wednesday to a 13-year low as investors questioned its survival prospects.

Nayar told NDTV Profit television he was leaving for personal reasons: “I am leaving behind a superb franchise.”

Based in Mumbai, Nayar will head up KKR’s first Indian office. New York-based KKR, one of the largest private equity firms in the world and a pioneer of the leveraged buyout business, expanded into Asia three years ago.

Citigroup named Mark Robinson, a 24-year Citi emerging market veteran, as his replacement. He is currently president of Citibank ZAO, Citi Country Officer for Russia and Division Head for Russia, Ukraine and Kazakhstan, the bank said in a statement.

The second-largest U.S. bank by assets has been reeling on concerns that mounting losses from credit cards, mortgages and toxic debt could overwhelm its efforts to slash costs and add deposits. Last month, Wells Fargo & Co (WFC.N) dealt a blow by derailing Citigroup’s bid to buy Wachovia Corp (WB.N).

Citigroup’s shares have plunged 33 percent so far this week as some investors concluded that Chief Executive Vikram Pandit’s latest plan to shed 52,000 jobs and cut expenses by one-fifth won’t restore the bank to health.

But the struggling bank is seen as unlikely to make deep cuts in Asia, its strongest performing region. (Click on [ID:nHKG364085] for a full story on the lookout for its Asian operations).

PE OPPORTUNITY

Private equity newcomers to Asia have had to decide which country to land in first, with not all of them reaching the same conclusion.

KKR announced plans to set up offices in Hong Kong and Tokyo in September 2005, a month after New York rival Blackstone Group (BX.N) said its first Asian office would be in Mumbai. Blackstone later expanded into Hong Kong.

Without a formal Mumbai office in place, KKR agreed to buy an 85 percent stake in Indian software firm Flextronics for $900 million in April 2006.

Private equity firms see opportunities in Asia’s growing economies, though the recent economic slowdown and financial market volatility has been a blow to the industry.

Citigroup is India’s largest foreign bank by assets. Its India balance sheet stood at 1.1 trillion rupees ($21.8 billion) as at March 2008. The Indian operations reported a profit after tax of 26 billion rupees in the fiscal year ending March 2008.

But Citi’s India retail portfolio has seen turbulence in recent months, especially the personal loans and credit card segments, which have witnessed rising defaults.

Last month, Citi’s India retail banking head T.R. Ramachandran moved to Aviva Life Insurance Co India Pvt Ltd as CEO.

Citi has about 10,000 employees in India, with a client base of more than 1,500 large corporates and multinationals, over 2,500 small- and medium-sized enterprises, over 40,000 asset-based financing clients and more than 7 million retail customers.

By Narayanan Somasundaram and Michael Flaherty
(Editing by John Mair & Kim Coghill)