When Covid-19 struck, Citi was at the centre of the global response, helping corporate clients bolster liquidity and prepare for the storm. Its work as a bookrunner on bonds last April – including Boeing’s $25 billion, ExxonMobil’s $9.7 billion and Ford’s $8 billion issues – was vital.
Some US banks lost market share at that time to rivals such as Banco Santander and above all BNP Paribas – last year’s winner of this award – especially in European syndicated loans, although Citi’s position remained steady in this area. Globally, Citi syndicated more than 500 loans worth more than $895 billion in 2020.
More recently, economic confidence has returned in many places, so the challenge has become slightly different. Corporate clients are seeking more strategic advice, often as they decide what to do with all the cash they have and as they think how they can take advantage of the exceptionally cost-effective funding environment in the capital markets.
Shortlisted
Whether it is retiring debt, stock repurchases or assessing the ratings’ agencies stance on their cash and debt metrics, Citi is one of the go-to firms for many considering these questions. M&A, meanwhile, is another crucial element for stronger corporates thinking about how they can use liquidity to boost their bottom line, whether it’s via opportunistic transactions or pulling the trigger on longstanding strategic possibilities.
In technology, one of the best-performing sectors since the pandemic, Citi has led financings for transformational acquisitions including a $10 billion bridge facility for Salesforce’s acquisition of Slack in March and a $7.5 billion bridge facility for Synnex’s merger with Tech Data in December.
In more challenged sectors Citi has also been central to emergency liquidity provision and to post-pandemic sectoral restructuring.
Take aviation, in which Citi led a $24 billion bridge for the combination of Aercap and GE Capital Aviation in March. Citi’s deep industry knowledge helps it support sectors like this, according to Jason Rekate, Citi’s global head of corporate banking. “You need to understand your clients and the types of business they’re doing, and you have to do a lot of diligence and underwriting to get comfortable with the risk,” he explains.
As more companies make their move on M&A, often using a combination of debt and cash – and in some cases moving across borders – suitcase bankers can be at a disadvantage when clients prefer in-person meetings and international travel is difficult. “Having people physically located in those 96 countries is a real benefit to our clients,” says Rekate.
“Our global footprint continues to be one of our major differentiators and has been enormously helpful during this period.”
Global strength
Indeed, the truly global strength of Citi’s corporate business is as hard to match today as ever: whether it’s working on a complicated cross-border equity block trade for a European multinational’s Asian subsidiary or arranging distributor finance in Latin America for a US multi-national.
Citi does business in more than 160 countries and jurisdictions, with a physical presence in 96 of these. More than half of Citi’s institutional client group revenue, $44 billion in 2020, comes from corporate clients and about 40% of that comes from outside the US. Emerging markets account for a quarter of its corporate client revenues.
These local offices, moreover, tend to be staffed not just with coverage bankers but also with product specialists in areas like foreign exchange and sales, cash management and trade finance.
When it’s a cross-border deal, financing M&A can require complex hedging arrangements for foreign exchange and interest rate risks, which again plays into Citi’s ability to offer much more than just lending. Its treasury and trade solutions division reported revenues of $9.5 billion in 2020.
Our global footprint continues to be one of our major differentiators and has been enormously helpful during this period
Citi’s 2018 establishment of a banking, capital markets and advisory group (BMCA) has been especially useful in making sure corporate banking is well coordinated with the equity and debt capital markets teams, according to Rekate. Now, Citi is reorienting its coverage model by combining different traditional sector groups to manage mega-trends, including clean energy, technology and digitization, and wellness.
As part of this shift towards mega-trends, Citi set up a new natural resources and clean energy transition group in March, bringing together its chemicals, energy and power teams. This followed Citi’s establishment, within BCMA, of a sustainability and corporate transitions group in May last year and a global sustainability debt capital markets team two months later.
The expertise of European banks, notably BNP Paribas, has previously stood out in sustainable finance. But Citi is also paying it more attention now, both in terms of own climate exposures and those of its clients.
“There’s been a real culture change in how the market approaches sustainability,” says Rekate. “We’re trying to be a leader and advise clients what’s doable and what’s not doable; what makes sense; what do the markets think about their risks and what do we think as a creditor; where are commitments insufficiently meaningful. Our clients are asking a lot of questions about this.”