Emerging Markets Daily - April 18
Citigroup Ends Era of Asian Retail Banking, IMF Sees Slow Sub-Saharan Africa Growth, Saudi and Iran in Detente Talks?, Ant Denies Jack Ma Share Sale, Raul Castro Steps Down + Lebanon Ramadan Blues
The Top 5 Emerging Markets Stories from Global Media - April 15
Citigroup Ends Era of Pan-Asian Retail Banking
Nikkei Asia
“Citigroup's decision to sell most of its Asian retail business after more than a century of operations marks an end of an era for several markets.”
“Long after its rivals gave up on being a bank for everyone across the world, Citi under new Chief Executive Jane Fraser is following suit in exiting subscale, underperforming consumer banking operations in China, India, Thailand and seven other Asian markets as well as three elsewhere.”
“While the impact on the countries' banking markets will be mostly symbolic, given that their citizenry are increasingly served by local and regional players, Citi's exit removes an institution that is the largest foreign bank in a number of markets and partly dismantles one of most far-flung international networks around…”
“The bank's Asia-Pacific history goes back to 1902. Citi currently employs 50,000 across 16 Asian markets and serves 17 million direct consumer clients, according to its website. ‘The market impact from Citi's withdrawal is not significant,’ said Michael Wu, a Hong Kong-based analyst at Morningstar. One of the most recognized banks in the world will not have a retail presence in most of Asia now, but strategically is in an expansion [mode] in wealth management and institutional business in the region.’”
“The Asian consumer banking market has increasingly turned into a graveyard for international banks, which bet that rapid growth in the region would draw in hundreds of thousands of customers eager to tap their expertise. However, regulators have favored local players and made it difficult for international banks to expand. Low interest rates since the global financial crisis, and increasing employee and regulatory costs, have crimped margins.”
“The bank on Tuesday said it would put up for sale its consumer franchises in Australia, Bahrain, China, India, Indonesia, South Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam. The businesses for sale delivered $4.2 billion of the $74.3 billion in revenue Citigroup earned last year and collectively operated at a loss, the bank said in a statement.” Narayanan Soma Sundaram reports
Sub-Saharan Africa to See World's Slowest Growth in 2021 - IMF
Reuters
“Sub-Saharan Africa is set to record the slowest economic growth of any world region this year as the continent struggles to bounce back from a pandemic-induced downturn, the International Monetary Fund (IMF) said on Thursday.”
“Wealthy countries must step up to ease access to vital vaccines and make financing available to Africa, where the global health crisis and its economic fallout plunged 32 million people into extreme poverty last year, the Fund said.”
‘Really, how the international community can help the region is by improving access to vaccines,’ Abebe Selassie, the head of the IMF's Africa Department, told Reuters in an interview ahead of Thursday's publication of the regional economic outlook for sub-Saharan Africa.” Joe Bavier reports
Geopolitics: Saudi, Iranian Officials In Direct Talks to Repair Ties
The Financial Times
“Senior Saudi and Iranian officials have been holding direct talks in a bid to repair relations between the two regional rivals, five years after they cut off diplomatic ties, according to three officials briefed on the discussions.”
“The negotiations, which took place in Baghdad this month, are thought to be the first significant political discussions between the two nations since 2016 and come as Joe Biden seeks to revive the nuclear deal Iran signed with world powers in 2015 and de-escalate regional tension.”
“Saudi Arabia is keen to end its war in Yemen against Iranian-aligned Houthi rebels, who have stepped up their attacks against Saudi cities and oil infrastructure. The Houthis have launched dozens of missiles and explosive-laden drones into the kingdom this year.”
“Crown Prince Mohammed bin Salman has also taken steps that appear to lean towards gaining favour with the Biden administration, which has pledged to reassess relations with the kingdom and end the six-year war in Yemen. The first round of Saudi-Iranian talks took place in Baghdad on April 9. They included discussions about the Houthi attacks and were positive, one of the officials said.”
“The official said the Saudi delegation was led by Khalid bin Ali al-Humaidan, the intelligence chief, adding that another round of talks had been scheduled for next week.”
“The process is being facilitated by Iraqi prime minister Mustafa al-Kadhimi, who held talks with Prince Mohammed in Riyadh last month. ‘It’s moving faster because the US talks [related to the nuclear deal] are moving faster and [because of] the Houthi attacks,’ the official said.” Andrew England reports.
Ant Denies Report That It’s Exploring Ways for Ma to Sell Stake
Bloomberg
“Ant Group denied a report that the Chinese finance-technology company is exploring ways for founder Jack Ma to sell his stake and give up control as a means to ease pressure from the country’s regulators.”
“Reuters reported earlier that officials from the People’s Bank of China and the China Banking and Insurance Regulatory Commission held talks with Ma and Ant separately between January and March, where the possibility of Ma’s exit was discussed. The report cited people familiar with the matter.”
“The company hoped that Ma’s stake would be sold to existing shareholders in Ant or its e-commerce partner Alibaba Group Holding Ltd., Reuters said.” Andrew Davis reports
Cuba’s Raúl Castro Retires as Head of Communist Party, Marking an End of an Era
WSJ
“Raúl Castro said he is stepping down as chief of Cuba’s ruling Communist Party, leaving behind a demoralized country running on little but post-revolutionary fumes as it struggles with growing food shortages and rising discontent.”
“Mr. Castro’s retirement announcement Friday, which came during a four-day party congress in the capital of Havana, marks a generational change as the old guard that took power with his older brother Fidel Castro in 1959 gives way to a younger generation of bureaucrats. The 89-year-old is expected to be replaced by his handpicked successor, [60 year old] President Miguel Díaz-Canel, a longtime party apparatchik.” José de Córdoba reports
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What We’re Also Reading….
As Economic Crisis Worsens, Lebanese Suffer During Ramadan
Al Jazeera
“Many Muslim families in Lebanon are struggling to afford iftar, the evening meal which breaks the daily fast during the holy month of Ramadan, as food prices soar amid the country’s worst economic crisis in decades.”
“‘Prices are insane and they have gone up even more during Ramadan … a plate of salad will cost six times more this year,’ Beirut resident Um Ahmed told Al Jazeera. ‘What do we do? Do we beg? We are not used to begging.’ Al Jazeera’s Zeina Khodr, reporting from Beirut, said that ‘for millions of people in Lebanon, food is becoming a luxury.’'“
“‘She said that while Ramadan is an important event for Muslims, there were “few signs” marking the occasion in many Beirut neighborhoods. ‘Gone are the lights, decorations and the vending stalls with traditional drinks that are staples on an iftar table.’”
“Lebanon’s economy and currency have been in free-fall, reducing people’s purchasing power. The Lebanese pound dropped to 10,000 against the US dollar in early March, and later in the month, it fell to an unprecedented 15,000. The currency has lost about 90 percent of its value since late 2019.”
“‘Those who used to buy a kilo of vegetables are now buying half, while others buy by piece … some just walk away after knowing the prices,’ Ahmed, a vegetable seller, said.” Al Jazeera reports.
South African Airways Slowly Getting Back on Its Feet
Simple Flying
“South African Airways (SAA) is continuing to get back on its feet to once again become a functioning airline. As part of this saga, currently within a drawn-out business rescue process, SAA will be getting new leadership in the form of an interim CEO named Thomas Kgokolo. This will make him the airline’s fifth CEO in five years…”
“There has yet to be a firm date on SAA’s restart. Its website notes that domestic and regional flights will remain canceled up to, and including, June 30th, 2021, as per a statement issued on March 29th. For now, bookings for July 1st and onwards will ‘remain in place for now,’ with the airline adding that ‘the cancellations pertain to the ongoing business rescue process and travel restrictions with respect to COVID19.’
“Meanwhile, a mid-February posting states that international flights will remain canceled up to, and including, October 30th, 2021.” Simple Flying reports.
US and China Pledge Joint Action on Climate Change Despite Strained Ties
Financial Times
“The US and China have committed to work together to urgently combat climate change despite rising tensions over Beijing’s assertive policies on Taiwan and the South China Sea and over human rights in Hong Kong and Xinjiang.”
“Edgare Kerkwijk, a board member of the Asia Wind Energy Association, said while the US-China statement ‘provides only a high level commitment’ and lacked detail, the joint promises will accelerate the world’s transition from fossil fuels.” Edward White reports