Bank for Governments: Citigroup

IFR Awards 2019
9 min read
Gareth Gore, Steve Slater

Private to public

Governments aren’t often associated with innovation and originality. But one bank has fought hard to replicate best practice in the private sector with its public sector clients. For its thought-leadership, and prowess across asset classes, Citigroup is IFR’s Bank of the Year for Governments.

Public sector banking has come a long way since the days when the only topics of conversation were procuring money from the markets and privatising state assets. Now, conversations are likely to span a wide range of areas: from crossborder payments to securitisation, from liability management to currency mismatches, and sustainable finance to risk management.

Citigroup has long been part of that expanding conversation. And since the early 2000s, when Stanley Fischer, former governor of the Bank of Israel and vice-chairman of the US Federal Reserve, decided to set up the public sector group within the bank, Citigroup has taken on the mission of identifying the best and smartest ideas in the private world and encouraging governments to do the same.

It is no coincidence that the bank now boasts almost every government on the planet as a client in some way, shape or form. The group and its 150 dedicated bankers, supported by local teams, and the US giant’s sprawling network of sector and products specialists, now have a roster of 750 public sector clients – ministries, central banks, pension funds, development banks – in every corner of the globe.

“We are supporting more than 150 governments globally that we have revenue from on a regular basis,” said Julie Monaco, who heads the group from New York. “We're responsible for making sure that we understand all of our client’s strategic objectives and connecting them to the solutions that we have on everything from transaction banking through to capital markets and risk management.”


During the past year Citigroup has time and time again led the way in identifying innovative solutions for governments. Through the bank’s innovations lab, which tests the application of transformational technologies for clients, and the public sector team’s efforts to shift the dialogue on from public versus private to the quality of asset management, Citigroup has been at the forefront.

In Australia, the bank put together a new crossborder payments and international cash management system for the country’s Department of Foreign Affairs and Trade. In the US, it built a unique custody solution for the network of Federal Home Loan Banks. In South America, it put together a solution enabling one government to make crossborder pension payments to its diaspora.

“We have been patiently advocating into ministry and into development organisations to say: ‘the markets have a competency for this’,” said David Walker, who heads the EMEA public sector team. He pointed to the sale of £3.7bn of student loans in the UK. Barclays won the mandate for the first such deal a year earlier, but Citigroup managed to oust them the second time round.

“This is the most complex collateral set that has ever been securitised in the financial markets,” said Walker. “They're not just student loans – they are income-contingent liabilities. So the sort of modelling that you need to do is highly complex. There was a real partnership between our own quant modellers and the government actuarial departments.”

Such partnerships with public sector clients are common for Citigroup, not least in its work giving advice on ratings. The bank has repeatedly helped clients address weaknesses or pressure points, helping them avoid downgrades or achieve upgrades. During the past year, its work with Oman and Tunisia prevented expected downgrades, while in Kazakhstan, it managed work towards an upgrade.

“We recreated the sovereign ratings models of the three ratings agencies and put the numbers through to see where the pain points are,” said Georgi Yordanov, who looks after Central and Eastern Europe, Turkey and Israel. “We look at what the ratings agencies are saying and focus on these areas. For different countries, it is really different. But we do this with all our government clients.”


One major push for the bank this year has been addressing risks for governments that have taken on debt in currencies other than their own. It has been working closely with multilateral development banks, executing interest rate and currency swaps that help both the development banks and sovereigns to better manage their exposure.

To that end, it encouraged Benin to tap the euro market for its first international foray into bond markets. Debut sovereign issuers normally target US dollars, but Citigroup felt the currency didn’t reflect the African country’s trade flows. Orders for the resulting €500m deal peaked at €1.25bn. It was one of a series of government deals the bank did in euros, including Kazakhstan’s €1.15bn deal in September.

In total, the team completed more than 500 bond deals for public sector clients. Notable transactions included Saudi Aramco’s US$12bn debut, which garnered a whopping US$100bn of orders, and Armenia’s maturity extension exercise. The bank also led Uzbekistan’s US$1bn international bond market debut, which priced inside the curve of higher rated neighbour Azerbaijan.

“The Uzbekistan deal was quite interesting,” said Yordanov. “This is a country which had quite a closed economy. About three years ago, we started engaging with the government. It took us about two years of coaching on ratings and bond processes to convince them that a bond financing would be beneficial to them. And our efforts finally paid off this year.”

In Turkey, the bank has stood by the sovereign despite on ongoing financial crisis that has led some rivals to reduce their exposure. In the middle of market volatility, it put together a US$1bn-plus debut loan for the sovereign’s Turkey Wealth Fund, which has been set up to manage government equity holdings and is expected to become a major bond issuer.

Sustainability has also been a key theme this year. The bank led South Korea’s innovative US$1.5bn sale of green and sustainability bonds, the first globally, which required huge amounts of work putting together documentation. As well as doing green bonds for Poland and the Netherlands Development Finance Company, it also led the Canada Pension Plan Investment Board’s first such transaction.


China’s Belt and Road Initiative continues to be a major theme, and Citigroup – because of its prowess in China and huge global network – has been ideally placed to pick up work linked to the programme. It put together a crossborder cash centralisation platform for a Chinese energy company operating in the Middle East, as well as BRI-linked bond deals for Bank of China and an Indonesian power company.

“As China goes along the development road, most of the countries they are going to are countries where we have a local presence,” said Monaco. “We have a close relationship with the government, we understand what the government’s objectives are, and we are a big bank of choice for the Chinese entities that wind up operating in these countries. This is the unique role the Citi can play.”


The breadth of the bank’s network and product offering put it head and shoulders above rivals during a busy year for public sector deals.

“A lot of our competitors cover public sector in isolated pockets from different product groups because they're limited in the breadth of products they're offering,” said Monaco. “A lot of them are just doing the bond underwriting or they're just doing a handful of products, whereas we have so many touch points across a sovereign that we have to run it as a global relationship.”

“People used to think of public sector and government as a pure local business, but we are a big global, integrated world,” she said. “And there's an incredible amount of business that governments do and need services for that go beyond even what's going on in their own country. And that's where we really try to differentiate ourselves.”

To see the digital version of this report, please click here

To purchase printed copies or a PDF of this report, please email