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The operation will be staffed by locals and supported by CitigroupÆs international GTS team and a platform, which services 46 global markets.
"WeÆve seen an increasing interest in Vietnam's capital market from our clients globally,ö says Mike Sleightholme, director and head of direct custody and clearing in Asia Pacific. ôThis was the main driver for entering the business along with the strong underlying growth of the Vietnamese economy and the governmentÆs desire to develop capital markets. All of these factors were recently evidenced in the extremely positive reception to VinamilkÆs listing,ö
VietnamÆs VN Index currently has a $1 billion market capitalization, of which Vinamilk accounts for about $513 million. However, Citi foresees a slew of privatizations over the coming years that will drive further investor interest into the market. It also believes this is being supported by the emergence of a number of international insurance companies.
Citigroup will offer domestic custody and clearing services to both local and international investors. This will include safekeeping, settlement, corporate actions, foreign exchange and cash reporting.
As the market develops further, Citigroup also sees securities finance, agency and trust services becoming an essential component of the Vietnamese business.
"The Vietnamese market is still developing and like all emerging markets, the key is understanding the regulations," Sleightholme comments. "However, the regulators have been very supportive and the time is right to establish direct custody and clearing securities services."
Outside of custody and clearing, Citi has been active in Vietnam since 1993, with branches in both Hanoi and Ho Chi Minh City. Its corporate banking services include the provision of short-and-medium term loans, cash management, trade finance and trade services, foreign exchange, hedging products, project and structured finance, and corporate advisory to customers in the corporate and institutional space.
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