Credit risk management practices in Citibank, N.A.

Abstract

Banking system of Bangladesh has been developed through three stages including nationalization, privatization and financial sector reform. Citibank, N.A., Bangladesh (Citi) has started its journey as a representative office in 1987 and as full service branch in 1995 (Industry, n.d.). Citibank, N.A. follows the rules and regulation imposed by the central bank of Bangladesh, Bangladesh Bank (BB). To manage credit risk, Citi determines individual credit limits to the clients and obtains adequate collaterals as required. Credit risk in Citi is monitored, evaluated and examined by Credit Risk Management Services (CRMS). Citi has developed Asset-Liability Management Committee (ALCO) to decide the maximum credit risk exposure. Senior management is constantly updated about the guidelines of BB and has executed new capital requirement according to BASEL-III. As I have completed my internship in CRMS, to determine the efficacy of credit risk management (CRM) practices, key aspects including the process of CRM, credit risk faced by Citi along with the tactics to mitigate the risk are analyzed in a broad manner. The credit risk management practices of Citi found to be estimable. However, the document requirement list and the credit limit approval process is a bit lengthy compared to today’s fast moving world. Strict and constant monitoring along proper documentation of the credit portfolio is the key for such praiseworthy status. Although the bad loans are below 2% of the total loan portfolio, Citi should be vigilant and emphasize to reduce or not at least increase the classified and non-performing loans (NPL), especially at this critical time of COVID 19.