Citigroup (NYSE:C) recently began operations of a new Latin America trade desk for its Global Transaction Services business.  This comes as a welcome move from the global banking group, which investors fear is losing focus on its sustainable businesses in its quest to rapidly slash non-core assets. The bank clearly wants to ensure its presence in the promising region. The new desk is based in Shanghai, China, and will meet competition from the likes of JPMorgan (NYSE:JPM) and RBS (NYSE:RBS). We maintain a $35 price estimate for Citigroup’s stock, which is close to current market price.
Citigroup’s Global Transaction Services business provides integrated cash management, trade, and securities & fund services to organizations around the world. The new Latin American desk aims to act as a link for Latin American clients to Asia, and will benefit from Citigroup’s expertise in managing Emerging Markets to Emerging Markets transactions.
Our analysis of Citigroup pegs its Global Transaction Services to be its second most valuable business – after its sales & trading business – contributing to more than a quarter of our estimated value for the banking group. Although servicing fees have been on the decline in recent years, we expect the trend to reverse and for Citigroup to rope in fees nearing the highs seen in 2008 over coming years.Notes:
- Citi Launches New Latin America Trade Desk in Asia, Citigroup Press Releases, Mar 7 2012 [↩]