The product palate may be limited, but Citi thinks it’s in on something good. Citigroup has opened a private-banking office in Shanghai, its first in mainland China. The megabank says it wants to establish a strong presence in China’s fast-growing wealth market before it becomes Asia’s largest – as it reckons it will before another 10 years have gone.

In that sense Citi’s foray into China is “an investment for the future,” says Todd Thomson, chairman and CEO of Citigroup’s Global Wealth Management division - Citigroup Private Bank along with Smith Barney, Citi’s brokerage unit. “We want to play an active role in the growth and development of China's wealth management sector.”

Join the club

Thomson cited China’s entrepreneurial culture, high savings rate and the rapid modernization of its banking sector as contributors to China’s rosy financial future.

China boasts something like 300,000 U.S.-dollar millionaires, according to the Boston Consulting Group, and the country’s high-net-worth assets under investment management could hit $1.73 trillion by 2009, according to the latest World Wealth Report by Merrill Lynch and Capgemini .

For now the Shanghai office will offer approved foreign-currency products to Chinese and foreign residents and approved and domestic-currency products to foreign residents. The office’s suite of products will expand only as regulations permit. It is still Red China, after all.

But Citi seems to be looking past the bare product roster in any case. “In addition to asset allocation and planning for their local financial services needs, the Citigroup Private Bank is uniquely positioned to offer a wide range of advice to entrepreneurs as they build their businesses for the future and consider capital needs,” says Thomson, in a clear allusion to investment-banking opportunities. “We will share with our clients our knowledge of global capital markets and provide them networking opportunities with their business industry counterparts around the world, many of whom are also our clients.”

Citi says it will open additional offices in China, as regulations permit. –FWR

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