Citi Expects to Return Capital to Shareholders by 2012

Citigroup expects to return capital to shareholders by 2012, according to the bank's CEO Vikram Pandit.

Vikram Pandit
Vikram Pandit

Presenting at the bank's financial service conference in New York City, Pandit did not say in what form the capital would be returned, via stock buybacks or dividends.

When asked why Citi , which claims to have adequate capital, is not returning capital sooner as some of its competitors say they plan to do, Pandit cited remaining uncertainty about domestic and international capital levels.

"No one is more impatient than I am," he said, adding by the middle of this year the bank will have the numbers it needs to make "prudent" decisions on returning capital.

Like other banks, Citi cut its dividend during the financial crisis to shore up capital. The recipient of $45 billion in bailout funds from the government, the firm is expected to the be last of the big banks to increase its dividend once it gets the OK from regulators.

Just yesterday, Bank of America , another recipient of $45 billion in bailout money, said it anticipates paying investors a modest dividend starting in the middle of this year.

A confident sounding Pandit noted Citi is a much different bank than it was three years ago. Near collapse during the financial crisis, Citi's recovered in the last year, posting its first profitable year in three in 2010.

Pandit's rebranded Citi as "America's Global Bank" and to that end, made frequent mention of the power Citi has to tap into the growing wealth and maturing consumer in developing nations like India and China.

"We are one of the few growth stories in this industry," said Pandit, noting globalization is a bigger trend than ever before.

In his statistic laden presentation he mapped out his case, reminding attendees Citi's strength lies in its well established presence in the emerging markets.

By 2030, Pandit said 75 percent of the world's GDP will be in emerging markets, up from the current 50 percent.

The bank plans to profit from this shift by capturing more of the wallet of a growing middle class that is flocking to cities where the bank already has, and is expanding its presence.

This presence, Pandit says, extends to its capital markets business, one ready to capture the emerging markets need for traditional corporate banking products and capital to fund massive anticipated spends on building infrastructure in these countries.

All of this is backed by the firm's dominant global transaction services business which moves $3 trillion in payments each day.

Pandit says the goal is to have each of these businesses, consumer, capital markets and global transaction services contribute equally to the banks bottom line.