Difference between revisions of "Citigroup Inc."

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Citigroup, Inc.
Founded 1998
Headquarters New York City, NY
Key People Vikram S. Pandit, CEO
Employees 275,000
Products Consumer, corporate and investment banking and finance, global asset management
Website www.citigroup.com

Citigroup vies with Bank of America for largest U.S. banking group and continues to rank in the world's top 10. Because of losses suffered during the crisis in mortgage-related securities, Citigroup said in mid-January of 2009 that it would split into two businesses. The announcement came in conjunction with the report of a fourth-quarter net loss of $8.29 billion — its fifth straight quarterly loss.

In Citigroup's reorganization, one business, Citicorp, would focus on traditional banking around the world, while the other, Citi Holdings, would hold the company's riskier assets. CEO Vikram Pandit's move would allow Citigroup to sell or spin off the Citi Holdings assets to raise cash. It also revealed the company's growing focus on back-to-basics lending and deposit-gathering, and dismantled the "financial supermarket" created by the company a decade earlier.

Citigroup suffered more than $65 billion in losses in late 2008 alone, more than half stemming from mortgage-related securities. The U.S. government stepped in twice to rescue the company with bailouts totaling $45 billion.[1] Since then, the company had been divesting itself of many of its assets. On Jan. 13, 2009, Citigroup announced a deal to spin out Smith Barney, its broking arm, into a joint venture with Morgan Stanley’s broker.[2]

Citigroup would still receive its share of revenue from the joint venture, but Morgan Stanley is taking a 51 percent stake in the venture, which would be called Morgan Stanley Smith Barney. Morgan Stanley also had an option to take further stakes. James Gorman would be the venture’s chairman.

With the reorganization of 2009, the new Citicorp would include the retail bank; the corporate and investment bank; the private bank, which serves wealthy individuals; and global transaction services.

In May of 2009, Ajay Banga, chief executive of Citi in Asia-Pacific, told the Financial Times that the bank, which the U.S. government rescued last year, also planned to expand lending across the region in spite of the “challenging” economic environment.[3]

Citi Holdings — which would account for $850 billion of Citigroup's $1.95 trillion in assets — would include Citi's asset management and consumer finance segments, including CitiMortgage and CitiFinancial. It would also be in charge of Citi's 49 percent stake in the joint brokerage with Morgan Stanley, and the pool of about $300 billion in mortgages and other risky assets that the U.S. government agreed to backstop in late 2008.[4]

On June 1, 2009, Citigroup was removed from the Dow Jones Industrial Average index (effective June 8) because it was in the midst of a "substantial restructuring." Robert Thomson, editor-in-chief for all of Dow Jones, said, "We genuinely hope that once the bank has refashioned itself that we will again be able to consider it for inclusion - Citigroup is a renowned institution, not only in this country, but around the world." [5]


Citigroup was formed in 1998 when banking giant Citicorp merged with insurance icon Travelers Group and began merging companies inside the two acquisitive titans. Citigroup also began rapidly acquiring other financial-service firms in the U.S. and abroad, including Japanese consumer-finance company Associates First Capital and Poland's Bank Handlowy w Warszawie SA in 2000.[6]

In mid-2008, Citigroup had about 200 million customer accounts and approximately $2.2 trillion assets. It ranked as the world's number seven bank by market capitalization with around $140 billion.[7] But like its arch-rival Bank of America, Citigroup took some heavy blows from the U.S subprime mortgage meltdown in 2007 and suffered losses and writedowns of around $40 billion.[8]

On Feb. 23, 2009, Citigroup officials were in active talks with federal regulators about plans for the government to take a bigger ownership stake in the bank. Citigroup approached the regulators with a plan that would allow them to convert a large amount of the government’s $45 billion of preferred shares, which is treated as debt, into common stock. The government owns a stake of roughly 8 percent, but that could grow to as much as 40 percent.

Citigroup may become the latest in a string of troubled U.S. companies that have recently sold stakes in themselves to foreign entities. Citigroup sources revealed in late May 2008 that the bank may sell a stake to the China Development Bank after negotiations that began in December 2007 were interrupted by Pandit's March 2008 management re-shuffle.[9]

In November of 2008, the company took radical action to cushion the blows of financial turmoil and revive its flagging share price, announcing plans to cut 52,000 jobs, or one in seven employees, and slash costs by about $10 billion (£6.6bn). The moves were a dramatic escalation of Citi’s efforts to deal with a crisis that has forced it to record a loss in each of the previous four quarters.[10]

In late November of 2008, Citigroup's stock price fell below $4 a share.[11] The U.S. government rescued Citigroup Inc., agreeing to shoulder most losses on about $306 billion of the bank's risky assets. They also injected new capital, bolstering investor hopes that the government would support big banks as the economy sinks into recession.[12]

Since Pandit's announcement Citigroup ditched among other things, 45 U.S. Citigroup branches in eight states, $12.5 billion in corporate buyout loans, the Diner's Club credit card franchise and New York investment banking base.[13] Citigroup also planned to close a call center and 49 Citifinancial branches in the United Kingdom.[14] They also considered selling its German consumer-banking arm Citibank Privatkunden, worth up to $6 billion euros[15]

Citigroup Inc. became a $40 stock for the first time since late 2007 in May of 2011. Citigroup, the heaviest-traded U.S. stock that accounted for 6.8 percent of total U.S. stock trading volume last year, drastically shrunk its share count. The move instantly erased its single-digit stock price.[16]

Key People

CEO Vikram S. Pandit[17] (left) was appointed CEO in December 2007 after his predecessor, Charles Prince, resigned under pressure in the face of mounting subprime losses. Pandit had been passed over for the top job at Citi in 2005, but had been recalled in July 2007 to run its alternative investment division.

Since taking the top job, Pandit has begun a global executive shake-up aimed at bringing Citigroup's regional decision-making structure closer to its clients and reduce costs by centralizing more global functions.[18] He also recently announced a plan to sell off more than $400 billion worth of legacy assets in banking, securities and real estate.[19]

Richard D. Parsons, former chairman of Time Warner, was named as Citigroup's next chairman effective Feb. 23, 2009. He succeeds Winfried F. W. Bischoff.[20]


  1. Unbreaking the Banks. Forbes.
  2. Citigroup's about-turn. The Economist.
  3. Citigroup To Hold Fast In China And India. Financial Times.
  4. Citigroup Posts Loss, Splits Up The Bank. AP.
  5. GM, Citigroup Removed from Dow. The Wall Street Journal.
  6. Citi's History. Citigroup.
  7. Top 20 banks in the world. Arun Uday.
  8. Citigroup's Weill admits flaw in Prince succession: report. Reuters.
  9. China Development Bank May Buy Citigroup Stake, Corriere Says. Bloomberg.
  10. Citi Cuts 52,000 More Jobs. Financial Times.
  11. Anatomy of a Meltdown. The New Yorker.
  12. Citigroup Gets Massive Government Bailout. Yahoo!News/Reuters.
  13. Blue-Light Specials at Citigroup as Its New Chief Plans a Revival. New York Times.
  14. Citigroup shuts UK call centre and 49 branches. The Times.
  15. Citigroup May Sell Its German Banking Business. Bloomberg.
  16. Citigroup Instantly Becomes a $40 Stock. WSJ.com.
  17. Vikram S. Pandit. Bloomberg.
  18. Citi Announces New Corporate Organizational Structure and Leadership Team. Citigroup.
  19. The Incredible Shrinking Citigroup. Motley Fool.
  20. Parsons Named Citigroup Chairman. The New York Times.