BABY STEPS TO GLOBAL FINANCIAL EMPIRE

Citigroup, the world's largest financial services company, is buying into the South Korean market. Citi's ability to make such direct investments in Korea's financial sector is the direct result of the sweeping structural reforms unrelated to the short-term liquidity problem South Korea faced during the Asian financial crisis that Korea was forced to accept as a condition for an IMF assistance package.

According to Deryck Maughan, chief executive of Citigroup International: "There are a whole series of markets... that are now opening to foreign
direct investment. What we have accomplished in Mexico with Banamex or
Poland with Handlowy we feel we can accomplish in a number of Asian
countries."

Then US Treasury Secretary and now Director and Chairman of the Executive Committee at Citigroup Robert Rubin, incidentally, oversaw this structural transformation of the Korean economy.

Citigroup's expansion into South Korea is eerily reminiscent of their expansion into Mexico in the wake of the reforms extracted from Mexico in the Rubin master-minded bailout of the Peso in 1995.

Aside from Citi's global civic worth, which I've often documented, the globalization of financial enterprises raises a number of sticky concerns. Multinational banks have been shown to be a major instrument in the transmission of financial crises around the world through otherwise dis- or distantly connected economies. They also have been shown to reduce the level of credit available to consumers and domestic small and medium-sized enterprises--the building blocks of economic development.