A man uses a mobile phone in front of a sign for Sumitomo Trust & Banking Co. in Tokyo, Japan, Thursday.

Citigroup Inc., rescued by the US government after a record loss last year, is “moving extremely fast” on asset sales, Chief Executive Officer Vikram Pandit said.

Pandit, 52, has sold units in developed countries including Japan and is turning his focus to emerging markets after the global credit crisis sent the US economy into a recession. The CEO credited asset sales with helping New York-based Citigroup post a profit for the first two quarters this year.

Citigroup Thursday agreed to sell its stake in a Japanese asset management unit to Sumitomo Trust & Banking Co., Japan’s fifth-largest bank, for 75.6 billion yen (US$795 million). The US bank has also sold assets in Japan to Sumitomo Mitsui Financial Group Inc. and Nomura Holdings Inc. since May.

“Our costs are down by about 25 percent, our assets are down by close to 25 percent, our risk is down more than that and so we continue to turn the company around,” Pandit said.

Pandit also said he expects the bank’s profitability in Asia-Pacific to increase, as the region is home to emerging markets including China. Citigroup plans to add four branches in Malaysia next year, he said.

Government stake

The executive predicted in June that Citicorp, Citigroup’s biggest operation by revenue, will derive half of its future business from emerging markets. The US government is taking a 34 percent stake in Citigroup after a $28 billion loss last year.

“We are one of the largest players in the emerging markets,” Pandit said Thursday. “And these are markets that are likely to grow pretty well over the next so many years.”

Asia-Pacific accounted for almost 25 percent of Citicorp’s revenue in the second quarter and nearly 40 percent of net income, James Griffiths, a Hong Kong-based Citigroup spokesman, said in an e-mail.

Pandit has argued that foreign markets offer the best opportunity for Citigroup to rebuild a capital base eroded by the financial crisis and repay the bailout funds. Citigroup has a bigger presence than rivals outside the US, while its domestic bank-branch network is one-sixth the size of San Francisco-based Wells Fargo & Co.’s.

Islamic subsidiary

Citigroup also plans to set up a standalone Islamic banking subsidiary in Malaysia, Pandit said. The bank has submitted an official application to Bank Negara Malaysia, the central bank, to establish the unit, he said.

Pandit was in Singapore Wednesday after visiting Hong Kong earlier this week, according to people familiar with the visit, who declined to be identified because the CEO’s itinerary isn’t public. Regional chief Ajay Banga quit in June to become president of MasterCard Inc.

“Vikram is here to connect with employees and clients and conduct business in a key region for Citi,” Griffiths said.

The three people who replaced Banga were Shengman Zhang, chairman of Asia Pacific, and Stephen Bird and Shirish Apte, regional co-CEOs.

Source: Bloomberg