During the investment banking downturn starting in mid-2000, investment in technology was severely constrained. Further, there was market pressure to develop new Java-based internet services for customers to access and scarce developer resources had to be redeployed to meet the needs.

Frequently, IT managers view established systems as “business-as-usual,” only requiring ongoing budget allocations for their maintenance. The need to continue adding enhancements to versatile, modular systems is often overlooked notwithstanding the competitive advantages new features provide to help preserve margins on the underlying business.

After obtaining line of business support, Citicorp was able to identify three critical system enhancements that would help preserve revenue margins, and with their help presented the case for preserving investment in a leading edge system.

The 2001 budget allocation was preserved at the level of the previous year (representing 60% over the initial allocation). This allowed the enhancements to be developed and delivered, and protected the competitive position of the underlying business.

Success proved that new modular system designs need continuing investment to keep pace with changing business requirements, and that users and developers need to work as a team to persuade IT management of the merits.

In early 1998, as the impact of the Asian financial crisis on our customers’ businesses was better understood, it became apparent that ready access was needed to information on exactly when individual customer exposures were due to mature. Actual run-off schedules needed to be available daily, regardless of the product type or the booking location.

Two separate centralized systems housed the data. Information needed to be amalgamated and fed to the responsible officers in a clear, consistent format.

Designed the reporting format for individual capital market product exposures and worked with the system developers to draw up a similar format for traditional credit product exposures on the parallel system.

Credit administrators received two separate daily feeds in MS Excel with identical customer identifiers enabling them to easily amalgamate and merge the exposure and present a report to decision-makers.

Citicorp utilized technology to enhance the ability to manage sensitive exposures in a rapidly changing business environment, and a good understanding of the underlying systems allowed for results to be delivered in a timely fashion.

In any post-merger situation, administrative practices and procedures need to be reviewed to ensure that the needs of the corporation going forward are addressed. Changes in procedures render some unnecessary and new ones need to be factored into the workflow. Credit Administrative practices at the new Citicorp in Singapore were no exception following the merger with SSBH.

Clerical staffers are not always motivated to change customary procedures or trained to evaluate the utility of tasks they undertake.

Staff needed encouragement to identify and define the purpose of each of the tasks they performed and conclude that it was indeed Credit-oriented as opposed to Operations or Compliance. New procedures were identified and added to the list.

This procedural review resulted in a headcount reduction of three positions (out of seven – two eliminations and a transfer) and a much more focused effort going forward. Staff had a greater sense of ownership of the tasks they performed.

Procedural reviews had to be undertaken with sensitivity to ensure that effected staff accepted and engaged necessary changes. In this way, not only were savings derived, but staff motivation and performance were also improved.

While an economic downturn can largely be anticipated, the speed and extent of the decline of economic activity is more difficult to forecast. In early 1997, it was apparent that Thailand was entering a period of economic uncertainty. However, few anticipated that the devaluation of the currency in early July would become a cataclysmic event.

There was a need to adjust the exposure profile and assume a defensive posture in anticipation of the downturn. Following the devaluation, there was further need to minimize exposure to potential loss without disrupting the corporation’s basic business in the market.

Because business development goals and profit plans are sometimes at variance with the realities of the credit cycle, line management needed to be convinced to take a defensive posture to prevent losses.

Available exposure to the financial institution market segment was proactively managed lower in four phases between April and November 1997 for a net reduction of exposure of over 80%.

The exposure profile was largely re-oriented to trade finance, and losses and restructurings were avoided.

Dynamic exposure management in consultation with line management allowed for loss avoidance while leaving the basic business plan intact.

In late 1993, the dealing room in Singapore, as part of its regional currency market-making trading initiative, had obtained approval to trade Sertificat Bank Indonesia (SBI – Indonesian Treasury Bill-equivalents) for interest rate management purposes. The SBI trading program grew steadily and by early 1994, the portfolio had grown to a notional equivalent of $800 million.

Given risk issues associated with the Indonesian market, senior Risk Management officers in New York expressed discomfort with the level of this trading activity, notwithstanding that positions were fully hedged.

A program review was undertaken to analyze the nature of the Indonesian SBI market—its size and liquidity, the number of dealers, the extent of foreign participation, regulatory, legal, tax, accounting, credit and reporting issues—and to define the operational flows to identify inherent risks.

This review satisfied senior management and the program was allowed to continue.

To safeguard segregation of responsibilities, it was important to have this review undertaken outside of the dealing room. We were able to demonstrate to senior management that we had a firm grasp over this trading activity to warrant their continued confidence.

In 1991, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) eased economic restrictions on Vietnam under the Trading with the Enemy Act for the sole purpose of facilitating family remittances from the United States to Vietnam. To enable this, banks in the United States were authorized for the first time since 1975 to establish correspondent relations with banks in Vietnam. Salomon Smith Barney Holdings was channeling an existing flow of remittances of some $30,000 per week through third parties, and the volume could be handled directly if a correspondent relationship were established.

The initiative had to be undertaken from New York because initially there were no marketing officers covering this business segment in the region.

A proposal was drawn up to introduce SSBH to the Bank for Foreign Trade of Vietnam and proffer the establishment of a relationship to tap into this existing remittance flow.

After protracted negotiations, an agreement was reached in mid-1993 to establish a correspondent relationship and channel the remittances via an agreed upon protocol.

This initiative required patience, the establishment of trust, and careful explanation. Ultimately, a team effort involving both Consumer Banking and newly integrated marketing officers of merger partner, Schroders, allowed for this success.