Citi in Ireland is more like a sophisticated manufacturing company than a bank, says its Irish chief Aidan Brady
Aidan Brady wants to set a few things straight. Amid all the public debate about bankers’ pay, he believes it is often lost on people that there are banks which didn’t lend on property, that are strongly profitable and that employ some of the State’s largest workforces.
The head of Citi’s businesses in Ireland, notes the US-owned bank employs 2,500 people in the Republic, including 300 contractors, and is one of the top five taxpayers in the State.
His business has moved beyond taking business from other parts of Citi’s global operation and has created something here to sell elsewhere, he says.
The company’s innovation centre in Dublin, which has 200 staff and growing, cooks up new products for banking transactions for use across Citi’s business around the world.
Brady sees international financial services in Ireland, and particularly Citi’s businesses, as being very different to what went on in the domestic banks over the past decade.
“Financial services is not all about lending mortgages to a consumer or a property developer. In our case, we don’t do either of those and never will. Some of the politicians who talk about this should come down and see what we do.”
‘Transaction services’
Brady believes introducing high levels of personal tax on the highest earners and those who create employment will only drive people to countries where there is no tax or where rates are far lower.
“You don’t want to be scaring away the people who are paying most of the taxes that people pay that keeps the country running,” he says.
Brady says the average man walking by Citi’s offices on Dublin’s north quays may wonder what they do inside the company’s Irish head office. He jokes that he sometimes asks himself the same question.
Put simply, Citi in Ireland provides the “rail tracks” and “nuts and bolts” for financial services and transactions for global customers and banks.
The phrase “transaction services” is a catch-all that Citi uses for this part of the business, which represents a big element of its Irish operations. These services include 20 products the bank has developed, among them a payment service called Worldlink, which allows the money men in big companies to make payments anywhere in 160 countries through 135 currencies.
Citi also provides custody and administration services to funds, securities lending and trust business, as well as all the the administration around the issuing of bonds, providing record-keeping around the various payments made on them.
The company was one of the book-runners on the €1 billion bond that Bank of Ireland issued last month, the first public bond issued by an Irish bank in more than two years.
It also has a corporate banking business in Ireland.
The bank Brady runs out of Dublin, Citibank Europe plc, made a profit of €755 million in 2011, up from €557 million the previous year. It paid €200 million in wages and €100 million in taxes last year. The company’s global transaction services business contributed €649 million in the year.
Trendy office
Brady says the head of transaction services worldwide for Citi likes to describe the Irish operation as “a technology company with a banking licence”.
The innovation centre on the ground floor of the company’s Dublin head office certainly resembles a software or technology lab rather than a bank branch.
Employees work at banks of computers in a trendy office with vibrant colours, note-filled whiteboards and videolink cameras set up in communal areas.
“I consider this business to be more like what you would see in any other multinational in Ireland. We are a bank but most of what we do is like a sophisticated manufacturing company,” says Brady.
“We have got products, we have got people who produce the products and we sell them across a wide range of things that most lay people wouldn’t understand.”
It was on the back of capital being invested by other companies that Citi entered the Irish market, opening a branch in Dublin in 1965 to service the wave of US multinationals that established bases here in the 1960s.
The bank ran a traditional branch on St Stephen’s Green employing 78 staff before Brady set out in 1993 to move to the fledging IFSC to create more business.
In 1995, the Irish operation pitched to run Citibank’s centralised corporate banking operations, which was how Citi then described the bank’s various transactions services. It won the business, giving the division a shot in the arm. In a frenetic nine months, Brady hired about 1,400 staff.
By 1998, the Irish operation had established itself, but as the Celtic Tiger economy grew and the cost of staff rose, he wasn’t content with the Dublin business being a cost centre.
He felt that to prosper, the unit couldn’t just be a drain on costs; it had to generate profits. The best way to do this, he thought, was to create and build the banking products out of Ireland to export elsewhere.
Brady set up Citibank Europe plc in 2001 as the company’s “profit centre” to make money from shifting products. The Irish unit has lost jobs to lower-cost locations such as Poland and India but has moved up the “value chain” by adding more higher-end jobs as it created more and more products.
The bank has lost about 600 or 700 jobs over the past five years, but has moved 700 or 800 roles into Ireland, he says.
“By just that thing of switching from being a cost centre to a profit centre we turned the whole thing around and up the value chain,” says Brady.
The resilience of the Irish workforce is in contrast with what is happening in the wider Citigroup. The US bank said earlier this month that it was cutting 11,000 jobs worldwide. This is in addition to the 96,500 jobs cut by the bank between 2007 and 2011. Only the US government and General Motors have laid off higher numbers in the US.
Brady says the bank approached the Government and IDA Ireland about three years ago, pointing to what international technology and pharmaceutical companies were doing in research and development in Ireland and indicting that Citi wanted to develop something similar.
Google Wallet
“They thought I was slightly mad because their view of research and development was traditionally men in white coats in labs or technology companies and, like everybody, people don’t understand financial services to a huge extent,” he says.
The bank’s innovation centre was the first to be opened across Citi’s global operations. Citi employs 200 skilled technology staff in Dublin working on sophisticated banking technology that could compete with similar operations anywhere.
The bank has produced the first card in the Google Wallet in the US that allows customers to shop and pay for items on smartphones. New products also allow treasurers in big companies and institutions to transact business on iPhones or iPads.
While the financial services sector has gone through a very tough time, IFSC business has remained very resilient, retaining its 33,000 jobs. Brady believes the sector will continue to undergo “a huge restructuring” and this means firms such as Citi must keep looking at its operations.
Citi’s new chief executive Mike Corbat, who replaced Vikram Pandit in a surprise changing of the top guard in October, was Brady’s boss in Europe and visited Dublin in May.
“He understands our transaction services,” says Brady. “It is a big piece of what Citi does – a quarter to a third. He understands the business and he knows Ireland, so that is good.”
Brady says that continuing to build on technology and develop new products for Citi and the global bank’s transaction services business is the “sweet spot in banking” for the Irish business.
As for the Government’s plan to create 10,000 new jobs in the financial services sector over the next five years, Brady says this will be “very difficult”.
The IFSC can continue compete against the likes of Luxembourg for further funds administration and services, he says, but beyond that it’s hard to see “a brand new niche”. Still the country can compete with other financial centres, he says.
“Ireland is really in a very good position. It has got a creative skills base, is relatively cost efficient for the higher end and has a culture that embraces change and re-engineering and all those lovely buzz words that people like to hear. It is in a good place in a very difficult environment.” he says.
Brady says that it is “fairly obvious” that Ireland would be left in a “very awkward position” and would lose business to London if the European financial transaction tax were imposed here and not in the UK.
The creation of a single euro area banking supervision could create more red tape if there was overlap with the regulation that the bank has to abide by in the UK, the US and in Ireland.
“If you had one regulator with one common view on everything that would be beneficial, but if it is another regulator on top of the other three or four which you would have to deal with, then it would not be beneficial and would be another burden on the business,” he says.
CV Aidan Brady
Name: Aidan Brady
Job: Chief, country office, Citi Ireland, and chief executive, Citibank Europe plc
Age: 58
Homes: Rathmines in Dublin, Wexford and Spain
Family: Married to Liz, he has two children, Jonathan and Jessica
Hobbies: Golf, football and motorcycling
Career: He joined Citi in Dublin in 1985 having started his career in financial services with ICC Bank in 1980. He has a commerce degree from UCD and spent five years with KPMG in Dublin, qualifying as a chartered accountant in 1980.
At Citi he has managed the derivatives and financial engineering business and head ed the treasury and corporate bank. He became chief executive of Citi International’s Irish branch in 1992 and in 2003 Citi Transaction Services Cluster Head for the UK and Ireland.
As senior credit officer and chief executive of Citibank Europe plc, he is in charge of branches in the Czech Republic, Romania, Hungary, Slovakia and Poland which falls under the company’s Irish bank.
He was appointed head of Citi Transaction Services for western Europe in 2007, a role that makes him responsible for the business in 17 countries: Spain; Portugal; Germany; Austria; Switzerland; Luxembourg; France; Netherlands; Belgium; Norway; Finland; Sweden; Denmark; Italy; UK; Ireland; and Jersey.
He became head of Citi Transaction Services for the business in Europe, the Middle East and Africa last year.
He is a former president of the Institute of Bankers in Ireland and a founding chairman of the Federation of International Banks in Ireland.
Something you might expect:Brady is in charge of 2,200 people working for Citi in Ireland, and a further 300 contract workers, making it one of the country's largest employers.
Something that might surprise:A keen motorcyclist, he owns three bikes – a Ducati Multistrada, a Honda Pan-European touring bike and a BMW R11 which he uses in Spain.
There are 21 sets of traffic lights between his home in Rathmines and his office in the IFSC on the north Dublin quays, he says, and he spends more than half of his time sitting on the bike at traffic lights.
