CITIBANK Rt.

Szabadság tér 7 Budapest H-1051 P.O. Box 123 Budapest H-1367

Phone: 361-374-5000 Fax: 361-374-5100 Homepage: www.citibank.hu

Citibank Budapest Rt. was established in Budapest on December 11, 1985, with an initial capital of HUF 1 billion. Its founders were Citibank Overseas Investment Corporation, with an 80% stake and the National Bank of Hungary with a 20% stake. The bank, the first venture of its kind in Eastern Central Europe at that time, started operation on January 1, 1986. The bank made profits in its first business year. After the allocation of the mandatory risk provisions, pre-tax profits amounted to HUF 34,655,405.

The fundamental goal in 1986 was to define the strategy concerning assets and liabilities and to develop a client base. The bank functioned within a banking system which had remained unchanged for 40 years, and had to adjust Citibank's well-proven and constantly improving 175-year-old business policies to the rigid Hungarian circumstances.

The bank established its major client base by 1987 with clients drawn from every sector of the Hungarian economy. The bank used Citibank's international network to grasp existing and potential business opportunities in Hungary. The bank expanded its services designed to promote exports and joint ventures through credit and investment in 1987. This proved to be another successful year, with net profits of HUF 436,326,836 after the allocation of risk provisions.

The bank continued to gain clients in 1988 and prepared for the impact of the new Company Act which came into force on January 1, 1989. The Act allowed the bank to promote the involvement of foreign capital into Hungary's economy through its international network.

In 1988 the bank made net profits of HUF 666,322,950, after the allocation of risk provisions, and total assets grew by 17.6%.

In 1989, foreign investments and privatisation played crucial roles in the development of a market economy in Hungary. The bank was keen to play a decisive role in this process, in the best interests of its customers, its own position and Hungary's economic development. In a year of unforeseen and sweeping changes in Hungary, Eastern Europe and the Soviet Union, the bank's total assets showed another 9% growth with profits after tax rising to HUF 854,138,214.

To improve the security of its banking operations the bank used its 1990 profits to increase its share capital and in 1991 total assets rose to HUF 35 billion. After-tax profits were HUF 1.469 billion. The main reason for the rise in total assets was the large growth in foreign currency deposits of joint ventures, which also improved the bank's liquidity. Citibank continued to increase its corporate lending and trade financing activities. The bank launched its custody service in 1991, aimed at foreign holders of Hungarian shares.

The Act on the National Bank of Hungary, which was enacted in 1991, obliged the Central Bank to sell its holdings in foreign banks. As a result, in 1993, Citibank Overseas Investment Corporation purchased the National Bank's 20% stake and became the sole owner of Citibank.

Total assets rose to HUF 43 billion in 1994, and after-tax profits were HUF 2.175 billion, mainly as a result of high revenue from commission and FX. The bank raised its registered capital to HUF 3.626 billion by reinvesting its after-tax profit.

In 1995 the bank launched retail banking services and COIC set up its brokerage arm. In spite of fierce competition, Citibank closed its 10th year with after-tax profits of HUF 3.602 billion and total assets of HUF 59.6 billion. The bank's registered capital was raised to HUF 4.308 billion, and the bank had a capital adequacy ratio of over 25%.

The bank modified its business strategy in 1996 and began to focus on expanding its market share. As a result, its total assets grew by 53.6% to HUF 93.2 billion, and after-tax profits were HUF 3.961 billion. Citibank gives special emphasis to improving the quality of its services. Central European Magazine named it "Best Foreign Bank in Hungary" in 1996. Global Custodian Magazine put Citibank's custody services in its "Commended" category. The capital adequacy ratio of the bank in 1996 was 18%, and its equity was up to HUF 10.095 billion.

In 1997, the bank changed its name to Citibank Rt., which reflects Citibank's commitment to increasing its presence not just in Budapest but in other parts of Hungary as well. In spite of fierce competition, the bank was placed high in the Hungarian banking market. With total assets of HUF 115 billion and after-tax profits of HUF 4.5 billion, it had the highest return on equity among commercial banks in Hungary. The bank decided to retain its 1997 profits to support the bank's further expansion and to set the ground for the introduction of new products.

COIC set up CitiLeasing (Hungary) Ltd. in 1997 and the Global Custodian Magazine has put the bank's custody services in its "Top Rated" category for the first time.

The bank's equity in 1997 was HUF 14.9 billion, and its capital adequacy ratio was 19.95%.

In August 1998 Citibank in Hungary purchased 100% of the equity of EKB, a Hungarian bank with several years of experience in services to local small and medium-sized enterprises. By combining this asset with Citibank's international experience, the bank launched CitiBusiness, a special line of business for small and medium-sized enterprises. CitiBusiness Direct, a system providing basic banking products over the Internet for emerging corporations was introduced in April 2000.

In August 2000 Citibank in Hungary purchased ING Bank's Hungarian consumer business, including the branch offices and related services for small- and medium-size business. The acquisition has not only expanded Citibank's customer base but has also enlarged its branch network to 17 branches across Hungary. Citibank considers the purchase of ING's retail business as a major opportunity to reinforce its presence and position in the Hungarian retail banking market.

The custody services of Citibank has been able to keep the "Top Rated" title granted by the Global Custodian Magazine during 5 consecutive years, beginning of 1998.

For further information:
Citibank Hungary
Ms Dora Dudinszky
Tel: +36 1374 5065 | Fax: +36 1374 5030
Email: dora.dudinszky@citicorp.com
Ms Livia Meszaros
Email: livia.meszaros@citicorp.com
Tel: +36 1374 5126 | Fax: +36 1374 5030
Website: www.citibank.hu

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