A top Chinese regulator for foreign banks has said Citigroup should expand its local operations in China, according to a media report.
Citi's China unit was "very prudent and careful" amid the global financial crisis and now should be "expanding, absolutely," Yan Qingmin who is the director of the Shanghai branch of the China Banking Regulatory Commission and one of the top regulators for overseas banks told The Wall Street Journal.
Meanwhile, last week a media report noted that Citigroup is scaling back its operations in the US to only six major metropolitan areas.
Yan said Citigroup should take advantage of growth in the Chinese economy and expand in the world's most populous nation.
He said Washington's support for Citigroup was the correct decision and the result has done little to alter how Chinese policy makers regard the financial services giant.
"Regarding the US government bailout of Citigroup, I think the American government measures were urgently needed," he said to the WSJ, adding, "they were very timely. At that moment, what we needed most was confidence".
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The comments suggest that Washington's 34 per cent stake in Citigroup, amassed after offering $45 billion in support this year, is not a worry for Chinese regulators, and perhaps is a source of comfort.
China's own banking industry is controlled by the state, with a Communist Party appointee at the helm of major institutions.
The report noted that Citigroup's global operations lost $27.68 billion in 2008, but its business in China remained healthy. Net profit from its China operation, which includes stakes in local banks, nearly doubled last year to the equivalent of $191 million.
According to the publication, Citigroup has expanded its base in China over the past year, but not as much as other foreign banks.
At the end of June, its loan-to-deposit ratio of just $6 in loans for every $10 in deposits was among the most conservative in the industry, he added.
The report citing a statement from Citigroup said "China remains one of Citi's top priority markets anywhere in the world. Our business in China is performing strongly and we continue to pursue growth across all lines of business."