CITIBANK is determined to prove that the number of branches a bank operates in Hongkong does not always reflect the amount of business it handles. Mr Tim Kelley, Citibank's senior vice-president and general manager of global consumer products in Hongkong, said despite having only 26 branches in the territory - about three per cent of the total - the bank now had 16 per cent of the credit card market, six per cent of deposits and 4.5 per cent of the mortgage market. ''I believe the number of branches will become less and less important in commercial banking,'' he said, adding that services such as automatic teller machines and telephone banking would make branch visits less of a necessity. ''In the future, the only reason to go into a branch will be to do cash transactions or consultative things.'' In fact, Citibank has no plans to expand its branch network in Hongkong because of high real estate prices. Mr Kelley said that in the future Citibank might follow the route taken by companies such as Cathay Pacific and locate some back-office operations in areas outside Hongkong, such as Shenzhen, to reduce costs. Citibank, which claims to be the first bank to offer telephone banking in Hongkong, is convinced the service will become an increasingly popular option for time-starved consumers. Mr Kelley said while consumer use of its 24-hour, seven-day service was not widespread, it compared favourably with other cities in which Citibank offered telephone banking. Another area where Citibank has carved out a strong presence is unit trust distribution. What began as a pilot project at four branches in January last year has become a thriving business as Citibank is now widely believed to be the largest unit trust distributor in Hongkong. One of the biggest attractions is the fact that the bank offers 168 different funds with only five or six managed by Citibank. Mr Kelley said despite the large variety, 80 per cent of Citibank's clients participated in only 10 to 15 funds. Citibank's unit trust business focuses on offering its customers a model portfolio by determining variables such as investment goals and risk tolerance during an interview with an investment counsellor. The bank requires clients to invest $80,000 in unit trusts because anything below that amount does not provide room for portfolio diversification. It is also difficult for Citibank to make any money by handling small investments. Investors are charged a front-end fee, which varies from fund to fund, while Citibank levies an annual administrative fee of $600. Mr Kelley said the bank promoted its unit trusts as long-term investments, not vehicles for people looking to make a killing in the short-term.
